Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — TRADE

Norway

Mr. Townsend: asked the Secretary of State for Trade if he intends to make an official visit to Norway.

The Secretary of State for Trade and President of the Board of Trade (Mr. Peter Shore): I intend to arrange a visit to Norway within the next few months, but I have no firm date as yet.

Mr. Townsend: I welcome the right hon. Gentleman's announcement. Will he take this opportunity to learn that Norway operates on a different economic scale from this country and consequently that if Britain were to leave the Community there would be little chance of our obtaining the sort of free trade agreement with the Community that Norway obtained?

Mr. Shore: I hope to learn a number of things from my visit to Norway, and I hope to observe the obvious prosperity which Norway is enjoying in spite of the many gloomy forecasts to the contrary exactly three years ago.

Mr. Jay: Is my right hon. Friend aware that before the referendum in Norway the public were told that all sorts of appalling consequences would follow if they did not join the EEC, and that none of them has followed?

Mr. Shore: My right hon. Friend is right. There are, of course, special factors such as oil which have helped, but the story of Norway in recent years has been one of a highly successful economy.

Laker Airways

Mr. Stanley: asked the Secretary of State for Trade what representations he has received from Laker Airways on the Skytrain; and whether he will make a statement.

Mr. Neubert: asked the Secretary of State for Trade what representations he has made to the United States Government since 3rd October 1974 in connection with the application by Laker Airways for permission to operate transatlantic Skytrain services.

The Under-Secretary of State for Trade (Mr. Clinton Davis): My right hon. Friend received the Laker Airways' letter of 15th January addressed to all Members. Since there may be an appeal against the Civil Aviation Authority's recent decisions on Skytrain, I should prefer to avoid comment.
A number of formal and informal representations, one of which I made myself, have been made to the United States Government specifically about their delay in issuing a permit, the last being on 3rd October 1974. Thereafter, in the light of the imminent need for the Civil Aviation Authority to review the fare and the licence as a whole, further representations would have been inappropriate, but the United States Government were kept informed of the proceedings.

Mr. Stanley: Is not the delay by the Civil Aeronautics Board in the United States in licensing the Skytrain intolerable? Can the hon. Gentleman say whether, in the most recent representations that he made, he laid down a deadline by which the British Government would expect the licence to be issued?

Mr. Davis: The delay was most unfortunate. The Civil Aviation Authority's expression of opinion about it is one which I wholly support, but I think it would be impossible for me, in the light of the circumstances now prevailing, with the possibility of an appeal coming to my right hon. Friend the Secretary of State, to lay down any deadline.

Mr. Neubert: I appreciate the Secretary of State's past record of robust defence of independent British interests


in this matter. May I ask whether he will be prepared to consider retaliatory action against American carriers if the American Government remain in breach of the treaty? Is the Secretary of State prepared to ensure that this matter is raised with President Ford when he visits this country after Easter?

Mr. Davis: I wholly endorse the hon. Gentleman's view about my right hon. Friend's robust defence of British interests which is continually deployed at Question Time in the House. So far as retaliatory action is concerned, having regard to what I have already said it would be inappropriate for me to comment other than to say that such action does not generally produce effective results.

Mr. Burden: Does the hon. Gentleman agree that there has been tremendous delay over this matter? Presumably the appeal will be made by a British airline, Will the hon. Gentleman give an assurance that whatever appeal is made will be dealt with expeditiously so that the matter can be settled so far as this country is concerned?

Mr. Davis: I have already commented on the delay. If notice of appeal is filed—and that has not yet taken place—the appeal will be conducted fairly and expeditiously.

EEC Countries

Mr. Marten: asked the Secretary of State for Trade if he will make a statement on the latest figures for the United Kingdom's trade balance with the Common Market countries.

Mr. Blaker: asked the Secretary of State for Trade what are the balance of trade figures with the EEC for the latest three-months period.

Mr. Shore: The visible trade deficit with the EEC Eight, on a balance of payments basis and seasonally adjusted, is provisionally estimated to have been £614 million in the fourth quarter of last year.

Mr. Marten: While not wishing to take up the time of the House rubbing salt into that wound, may I ask the Secretary of State to take this opportunity of explaining in clear words that

when Britain leaves Europe we shall not turn our backs on Europe or be isolated from Europe, which are the current defeatist themes of the dispirited pro-Marketeers?

Mr. Shore: The hon. Gentleman knows very well that I have never taken the view at any stage—nor do I hold the view now—that if we decided at the end of the day, with the assistance of the British people, to withdraw from the EEC this would lead to a great disaster for our trade. I do not believe that. It would be a great mistake for people to try to conduct the debate on this matter in terms of bogies and scares of the most unconvincing kind.

Mr. William Hamilton: Will the Secretary of State give us an assurance that he will cease his malevolent misinterpreta-of these figures, more epecially since the Foreign Secretary contradicts what he says, while all the other objective authorities do the same? Will he give us an assurance that if, as seems likely, the Government make a recommendation that the renegotiated terms are acceptable to them, he will have the guts to resign?

Mr. Shore: I am not sure what a malevolent interpretation is, but I will always listen very carefully to my hon. Friend on the subject of malevolence. I have said nothing so far in my answer about the interpretation. All I have given is a factual reply.

Mr. Hamilton: No, you have not.

Mr. Shore: If my hon. Friend will allow me to complete my sentence, I was saying that the figures for the last quarter of 1974 showed a trade deficit on a balance of payments basis with the EEC Eight of £614 million. I stick by those facts.

Mr. Blaker: Since the right hon. Gentleman's Department recently informed the House that in 1974 as a whole one-third of our exports went to the EEC and one-third of our imports came from the EEC, does not this show that the problem of our trade deficit with the EEC is only part of the problem of our global trade deficit?

Mr. Shore: Yes, indeed. We have another absolutely major factor in our


trade deficit, which is above all the price of oil. The oil deficit is greater than the EEC deficit. However, if we eliminate the oil trade—which according to some points of view it would be fair and reasonable to do—there is no blinking the fact that the greater part of our non-oil deficit is attributed to the deficit with the EEC or is accounted for by the EEC deficit.

Mr. Powell: Do not these figures show, upon any interpretation, that the rest of the EEC countries have as great an interest in retaining industrial free trade with this country as we have with them?

Mr. Shore: I think, on the basis of the experience of the last two years, that it is an undeniable fact that the EEC has found it much easier to get into the British market than British exporters have found it to get into the EEC.

Mr. Luard: Has my right hon. Friend noted two answers given to me last week, one of which showed that the proportion of our total deficit with the EEC and with the world was lower in 1974 than in the previous year and in 1969 and the second of which showed that from 1971 to 1974 our exports to the EEC more than doubled, representing a much greater increase than our exports to the Commonwealth, which increased only by 40 per cent.? Is not it a fact that if we withdraw from the EEC British exporters will be severely hurt and our balance of payments may not be any better than it is now?

Mr. Shore: I cannot accept the point made in the last part of my hon. Friend's supplementary question. I think that depends entirely on two factors: first, what kind of arrangements should be made with the EEC to cover our trade and, secondly, how much importance in the total mix we are to attribute to a given level of tariffs. These are obviously matters which we can discuss, although I do not think we should draw alarmist conclusions. The share of our deficit attributable to the EEC marginally decreased last year but only because we were faced last year with a fourfold increase in the oil bill. But that does not mean anything.

Mr. Higgins: Will the Secretary of State tell us the facts concerning our invisible balances with the EEC? Did not the question of the hon. Member for Oxford (Mr. Luard), and did not the Secretary of State's answer a few days ago relate to the non-oil deficit? Is not it therefore irrelevant to make the point which the Secretary of State has just made?

Mr. Shore: I have always been very careful in the House to distinguish between the total deficit and the non-oil deficit. I do not think anyone can accuse me of making any attempt to confuse the two. I fear that many lion. Members on both sides have recently confused the two. I have done my best to sort it out in the most straightforward way. If people cannot bear the facts, I cannot help them.
I think that some figures will be available soon as regards invisible trade with the EEC, but I shall get in touch with the hon. Gentleman.

Mr. Spearing: asked the Secretary of State for Trade if he will undertake a detailed analysis of trade of the United Kingdom with the original six members of the Common Market.

Mr. Shore: Trade between Britain and the EEC is continually under review and, of course, detailed statistics are regularly published.

Mr. Spearing: Does my right hon. Friend agree that the increase in the trade deficit to approximately £2,000 million has not only been against the trends forecast by some hon. Members but that one would have expected the opposite to take place bearing in mind the floating of the pound some years ago? Can my right hon. Friend suggest to the House any trends in trade with the EEC which account for this extraordinarily large deficit?

Mr. Shore: I can only help my hon. Friend in terms of the categories of trade in which there has been the principal deterioration. I have already told the House that the main categories in which we have suffered serious deterioration are food, steel, chemicals and across the whole range of what one might call semi-manufactures. There is not a clear pattern which emerges from this.

Mr. Higgins: Are we to understand from the right hon. Gentleman's previous reply that he has no figures for the balance of trade in invisibles between this country and the EEC? In view of the way in which, by innuendo, he continually seeks to give the impression that since we joined our overall deficit with the EEC is worse than it would otherwise have been, will he confirm that he has no data which supports this view?

Mr. Shore: The hon. Gentleman must not attribute sentiments to me and then ask me to deny them. That is a frivolous approach to the question. I do not have with me figures of invisible trade with the EEC. I shall be happy to give those figures as soon as they are available. However, they are not collected on the same regular basis as we collect figures for invisibles globally.

Mr. James Johnson: Is my right hon. Friend's memory as good as mine, bearing in mind the selective sets of statistics which have been exchanged between both sides of the House, including the Minister, since half-past two? Does my right hon. Friend think, as I do, that no Minister in any Government has ever thought other than that entry to the EEC would be a difficult task and that benefit would come later rather than sooner?

Mr. Shore: I have the greatest respect for my hon. Friend and his memory, which I am sure is superior to mine on many matters, but what he has just said is not correct. I remember clearly how during the period of negotiation, members of the Conservative Front Bench proudly and confidently proclaimed that there would be great benefits for the British people. My right hon. Friend the Member for Battersea, North (Mr. Jay), in particular, was looked upon as being utterly ridiculous when he gave the figure of up to £1,000 million as the balance of payments deficit.

Mr. Adley: Does the right hon. Gentleman recognise that what the hon. Member for Kingston upon Hull, West (Mr. Johnson) said is essentially true, and that in his heart he must know it? I have just returned from a convention in Switzerland at the weekend which was attended by business men from inside and outside the Community and from North America, and not only they but their wives and

families and most other people outside this country believe that if we leave the Community it will be seen by our friends round the world as the final folly of a once great nation.

Mr. Shore: There is undoubtedly a difference between business sentiments and the sentiments of the great majority of people in the country. But there was a difference also in Norway, and the predictions and gloom there turned out not to be justified.

Mr. Jay: Is not the outstanding fact which emerges from all the figures that, whereas we had virtually no trade deficit with the EEC Six in 1970, our trade deficit with the Six last year was almost equal to our whole non-oil trade deficit with the world?

Mr. Shore: In 1970 we had a very small deficit with the EEC. Last year we had a deficit of just on £2,000 million. The deficit with the EEC was equal to the whole of our non-oil deficit.

Dr. Bray: asked the Secretary of State for Trade what proportion of the deterioration in the trade balance with the original six members of the EEC since Great Britain's entry has been due to relative movements in exchange rates; and what steps he is now taking to improve the balance by taking advantage of the reduction in prices of British goods in Europe due to the exchange rate movements.

Mr. Shore: Our trade has been affected by a number of economic factors and there is no certain way of identifying the individual effect of movement in exchange rates. In qualitative terms, the sterling float has strengthened our competitive position in European markets and elsewhere. The Government and the British Overseas Trade Board have recognised the importance of this and have been urging exporters to examine their pricing policy to take advantage of the increased competitiveness both for themselves and the balance of payments.

Dr. Bray: Does my right hon. Friend agree that after a devaluation there is an initial deterioration of the trade balance, which he has pointed out with regard to Europe, but that it also provides the


opportunity for greatly improved exports to the countries affected? Does not my right hon. Friend therefore agree that there are excellent opportunities for exports in Europe?

Mr. Shore: I hope that there are great opportunities for Britain's trade. Indeed, we have to make those opportunities because the present state of our trade, in spite of the recent improvement, is unsatisfactory, and we jolly well have to get back into balance. As for the initial effects of devaluation, it is difficult to get this question right because there has been a two-phase movement in the exchange rate in relation to the EEC. This was not a single-date devaluation but a float which began in June 1972. There was an initial fall of perhaps of 10 per cent. or more by the end of that year followed by relative stability and then further devaluation in 1973. We have now had some 16 months of relative stability in exchange rates, and I have yet to see the improvement in our export performance that we had hoped for.

Mr. Higgins: In view of the right hon. Gentleman's contradiction of the Prime Minister's recent remarks, will he say whether the disposition of collective irresponsibility in commenting on EEC matters has now begun?

Mr. Shore: The hon. Gentleman must try to do better than that.

Tourism

Sir J. Eden: asked the Secretary of State for Trade what effect he estimates his new guidelines for tourism and its promotion in the United Kingdom will have on the volume and value of tourist activity in the West Country Tourist Board area.

Mr. Adley: asked the Secretary of State for Trade what consultations he has had with the travel, hotel and catering industries in the formulation of his policy guidelines for the tourism industry: and if he will make a statement.

The Under-Secretary of State for Trade (Mr. Eric Deakins): The new guidelines are designed to maximise the benefits of tourism for the national economy as a whole rather than to define the position of particular districts or interests. The

three national tourist boards and the British Tourist Authority, who are very closely in touch both with regional problems and with the trade, are being consulted about implications of the guidelines. Until their analysis has been received and studied I should not wish to add to my right hon. Friend's lengthy written reply to my hon. Friend the Member for Leeds. West (Mr. Dean) on 21st November last.—[Vol. 881, c. 525–6.]

Sir J. Eden: Will the Secretary of State give us an assurance that, in developing the untapped potential of tourist areas outside the established centres, no damage will be done to the existing tourist areas and that there will be no reduction of money spent on the promotion of tourism in areas such as the West Country, where this is the No. 1 industry?

Mr. Deakins: I cannot give the hon. Gentleman that assurance at this stage until the results of the review are known and studied. The Government appreciate the importance of tourism to the West Country. However, promotion must be seen as a local and commercial responsibility as well as an Exchequer task. Government funds are available to prime the pump but resources are too limited to make an indefinite subsidy. Above all, there are the less prosperous areas which, with appropriate help, can attract tourism and benefit from it to the benefit of us all.

Mr. Adley: Is the Minister aware that his right hon. Friend's recent statement was welcomed by many people as evidence that the Government were prepared seriously to rethink the tourist policies? Is he further aware that my interest in the industry enables me to look at how other countries promote tourism? Will he, for instance, take note of the fact that the Hungarians have embraced capitalism in their promotion of tourism in Western Europe and that the Swiss do as he suggested should be done and fully incorporate the views of commercial interests in the promotion of their tourism? Will the Secretary of State keep an open mind on the total rethink of the tourist policy being pursued by the Government?

Mr. Deakins: I am grateful for the hon. Gentleman's remarks. I assure him


that the Government's mind is open on this issue. However, until my consultations are complete we do not wish to add anything to what I have said.

Mr. Wigley: Will the Secretary of State bear in mind, if the Government are successful, as we hope they will be, in developing tourism, particularly in areas such as the West Country and Wales, where the resident population may be low, the strain on the local economy in terms of car parks and other facilities? Will he have discussions with his colleagues in the Department of the Environment and the Welsh Office to consider whether financial assistance can be made available to local authorities for this purpose in the next financial year?

Mr. Deakins: When we have the result of the review and the comments of the British Tourist Authority and the tourist boards, we shall undertake such discussions as are appropriate including, if necessary, discussions with the Department of the Environment.

European Economic Community

Mr. Ron Thomas: asked the Secretary of State for Trade if he will make a statement on his assessment of the trade-diversion and trade-creation effects on the United Kingdom balance of trade arising from United Kingdom membership of the EEC.

Mr. Shore: Although there has undoubtedly been a switch towards the EEC in the sources of our imports, particularly foodstuffs, I am not ready to make any overall assessment of the effect of membership of the Community on trade creation and trade diversion.

Mr. Thomas: Does my right hon. Friend agree that there was general agreement on all sides, and indeed in the White Paper itself, that there would be trade-diversion effects which would lead to a loss in terms of Britain's balance of trade, but that those who advocated British membership of the EEC continued to argue that this would be more than offset by the trade creation within the EEC? Is it not rather strange reasoning that those advocates should now use the losses due to the trade-diversion effect as some justification for our massive deficit with the EEC?

Mr. Shore: There is a great deal of sense in what my hon. Friend has said. There is, however, a difficulty in any event over the period that we experience about isolating these two effects in so far as they ever could be separately identified and, further, doing it against the background of many other factors that are at work in our trade. It would be a worth while study, no doubt, but a very difficult one to make.

Mr. Wyn Roberts: Will the Minister confirm that more than half the crude trade deficit with the EEC Eight last year was accounted for by the food and live animals sector? Has not that deficit increased because our food importers are buying cheaper food from Europe?

Mr. Shore: The hon. Gentleman should look carefully at the food items and distinguish those that may be cheaper in Europe than they were in the rest of the world during the year 1973–74 and those that were dearer. He must consider the mix of those two facts before reaching any conclusion. On the hon. Gentleman's first point about half the deficit—

Mr. Roberts: More than half.

Mr. Shore: No, almost certainly the hon. Gentleman is wrong about that. I think he will find that it is more like one-third.

Insurance Policy Holders

Mr. McCrindle: asked the Secretary of State for Trade when he expects to introduce the promised legislation to protect policy holders.

Mr. Clinton Davis: As soon as possible this Session.

Mr. McCrindle: In view of the possible delay and the danger of retrospective legislation, will the Minister look at the position of Nation Life policy holders? Will he, for example, consider engaging in further discussions with the insurance interests to see whether agreement can be reached to a joint declaration between the Government and the Life Offices Association indicating that, when the amount from the liquidator from realisable assets is known, those who have effected these contracts can know that the Government and the insurance industry combined will then be prepared to make up the difference between that


percentage and perhaps 80 per cent. to 90 per cent. of the original investment? Does the Minister realise that great worry and concern exist among a great many people and that joint action by the Government and the insurance companies would be most welcome?

Mr. Davis: I appreciate the anxiety and distress that have been caused as a result of this unfortunate failure, but I cannot agree that Nation Life should be encompassed by the Government's scheme. This scheme is to be financed by a statutory levy on the insurers and it would be wholly unreasonable to expect them to pay out for losses in respect of companies that fell before the announcement was made by my right hon. Friend on 29th October last year.

Mr. Edwin Wainwright: Does my hon. Friend realise that there are thousands of people throughout the country who get involved in this sort of thing and that the dreadful thing is that I am told that even today Nation Life is taking contributions from individuals? Will he have another look at the problem, because it is a great pity when working-class people are so kidded on by financiers of this kind to invest in concerns such as Nation Life and then lose their money to the extent that they will lose it?

Mr. Davis: It is true—this is one of the principal reasons for the introduction of our scheme—that ordinary people who have no expertise in these matters and who rely on the expertise of others, which is not always forthcoming or available, find it very difficult to distinguish between one company and another and one policy and another. Therefore, it is a fundamental aspect of our scheme that we should help such people. It is quite another thing to introduce the scheme on the basis of retrospection to a degree where the insurance industry could not possibly have recognised that it was being called upon to help this organisation.

Airport Charges

Mr. Warren: asked the Secretary of State for Trade if he will make a statement about the consultations held between his Department and the British Airports Authority over the authority's proposed increases in airport charges.

Mr. Clinton Davis: A proposal by the British Airports Authority for an increase in airport charges is being examined by my Department, and I expect to inform the authority shortly whether the increase is approved.

Mr. Warren: Will the Minister confirm that among these proposals is one for a 35 per cent. increase in charges at Gatwick, for instance, to start on 1st April, which is a tremendous burden for the airline operators to have to take aboard bearing in mind that they were told six months ago that only a 25 per cent. charge was likely? Secondly, will the Minister use his rights to veto this extraordinarily inflationary proposal by the British Airports Authority?

Mr. Davis: No, Sir. It is perfectly true that there is to be a 35 per cent. increase on 1st April 1975, but it has to be borne in mind that the last increase was on 1st April 1972; charges were adjusted on 1st April 1974. As for the 25 per cent. point, the situation has changed and in those circumstances the calculations of the British Airports Authority had to change.

Mr. Crawford: Within the context of devolution, and given the express wish of the Scottish Council that such a body should be set up, will the Minister establish in Scotland a Scottish airports authority to take over the running of airports there which are currently managed by the British Airports Authority?

Mr. Davis: That is quite another question. The point will be examined, but I cannot give the hon. Gentleman any assurance that a separate airports authority will be established, because I am not at all sure that simply to manufacture another organisation would improve efficiency, which is the important criterion.

Japan (Trade Missions)

Mr. Hooley: asked the Secretary of State for Trade how many trade missions visited Japan in 1974; and how many are planned for 1975.

Mr. Deakins: Twenty-seven missions visited Japan in 1974. So far plans are firm for 22 missions in 1975.

Mr. Hooley: Is my hon. Friend aware that that information is very welcome? Will he urge upon British industry the


importance of exploring the Japanese market, which is one of the largest industrial and consumer markets in the world? Has his attention been drawn to the recent ineptitude of British Leyland in its approach to that market?

Mr. Deakins: I am well aware, as are the Government and British exporters generally, of the importance of the Japanese market. I welcome any signs on the part of any major British company in particular which has so far neglected this market that it is seeking, through the British Overseas Trade Board and other bodies, to get into this fast-growing market.

Mr. Richard Wainwright: Will the Minister do his best to ensure that the message conveyed by these missions to the Japanese is that the Government intend to proceed not by restricting imports into this country from Japan but rather by encouraging an increase of existing exports to Japan, including fine worsted cloth?

Mr. Deakins: I am happy to give that assurance. That remains Government policy. We want to see a further increase in the volume and the value of British exports to Japan, which have increased greatly in the past two years, thanks largely to the British Overseas Trade Board and the many British exporters who have taken part.

Mr. Park: Will any of these missions concern itself with ensuring that our exporters in this country are given a fair crack of the whip in getting their goods into Japan? It seems that a huge tangle of red tape is erected by Japan to make it very difficult for our car exporters in particular to get into that country.

Mr. Deakins: There is a later Question on the Order Paper about car exports and imports which I do not want to anticipate. On the general point about red tape and restrictions in Japan, the position has eased a great deal in the past few years. I believe that British exporters who may well have been put off three or four years ago will find a different situation when they seek the advice of the British Overseas Trade Board and visit Japan themselves.

Mr. Rost: Will the Minister make a careful study of the correspondence he

has received from Pressac Limited—a firm in my constituency which manufactures components for the television and motor industries—about the serious effect to employment that results from what it believes may be unfair importing practices?

Mr. Deakins: The Government are always willing to look closely at any sign of unfair trade practices such as dumping or subsidisation in any form. We always have to be approached in the first place by the industry concerned. We are happy to advise it upon the evidence that it requires and the submissions it should make. I believe that the Pressac matter is under consideration.

Burmah Oil Limited

Mr. Ridley: asked the Secretary of State for Trade if he has received an application from shareholders of Burmah Oil Limited for an investigation under Section 164 of the Companies Act in order to determine why the directors sold a substantial asset of their company at less than it was worth.

Mr. Clinton Davis: No, Sir.

Mr. Ridley: Is the Minister aware that according to the latest count the shareholders have lost about £117 million as a result of this sale? Will he tell the House whether the Government put any pressure upon the directors of Burmah Oil to the effect that they would receive the Bank of England guarantee only if they made the sale at low value? Will he say whether that is true?

Mr. Davis: I have no knowledge of any such pressure, but that is a matter for my right hon. Friend the Secretary of State for Energy.

Commonwealth Countries

Mr. Dykes: asked the Secretary of State for Trade what was the crude trade balance between the United Kingdom and our other Commonwealth trading partners in each of the years 1970 to 1974, respectively.

Mr. Guy Barnett: asked the Secretary of State for Trade what is the trade surplus or deficit with the Commonwealth for 1974 to the latest convenient date;


and what is the comparable figure for 1973.

Mr. Shore: The "crude" trade deficits—that is, the difference between exports valued fob and imports valued cif—with the Commonwealth in each year between 1970 and 1974 were £468 million, £174 million, £312 million, £637 million and £580 million respectively.

Mr. Dykes: Why is the right hon. Gentleman getting so worked up when on those figures, particularly in the latter years, there has been a deterioration in our trade with the Commonwealth which proportionately has been much worse than the effects of our trade with the EEC? Does he now suggest that we should leave the Commonwealth?

Mr. Shore: The hon. Gentleman is entitled to put whatever interpretation he wants on the figures, but they seem to me in a sense to show a certain stability. They begin in 1970 with a deficit of £468 million. Last year there was a deficit of £580 million. There has been some up-and-down movement in the middle. That does not indicate any great change. I would point out that there is a component of oil in the 1974 figure. Presumably that relates most of all to our trade with Nigeria.

Mr. Molloy: Does my right hon. Friend agree that the selection of figures for periods relating to Commonwealth and EEC trade does not help the great argument? Is he aware that there will be a feeling abroad that the persistent argument that we are hearing for remaining within the EEC seems to suggest that it was some sort of miracle that Britain existed at all before the EEC was created? Does he agree that the logic of that thinking that the protagonists of the EEC should bear in mind is that, for the miracle to continue, the sooner we get out the better?

Mr. Shore: I agree with my hon. Friend that the figures should be treated with the most scrupulous care. I entirely agree with his other remark. One of the most disagreeable features of the whole debate about the EEC is that the protagonists of entry on any terms are constantly seeking to denigrate this country and to create a mood of gloom and doom about our national future.

Airline Flights (Security)

Mr. Aitken: asked the Secretary of State for Trade if he has plans to introduce sky marshals as security guards on passenger flights of British airline companies; and if he will make a statement.

Mr. Clinton Davis: I have given careful consideration to the use of armed guards on flights of British airlines, but I am not satisfied at present that this would on balance be in the interests of the safety of the passengers and crew.

Mr. Aitken: Is the hon. Gentleman aware that in the Middle East at least one national carrier has introduced sky marshals with conspicuous success? Should he not give further consideration to introducing sky marshals equipped, for example, with low-velocity rifles? They would seem on the evidence so far to have improved security on some Middle East carriers.

Mr. Davis: I am aware of success in this respect concerning E1 A1. That is unquestionably the case. However, each Government must make their own decision on the basis of the threat or the risk as it appears to them. Unhappily the position of Israeli aircraft is unique. United States airlines which deployed the use of sky marshals for some little time have now, so far as I am aware, abandoned the concept in the interests of passenger safety and because of the pressure exerted by crews. Our own crews are distinctly worried about the possibility of sky marshals being carried. That is the position even if we were to take into account the possibility of the use of different weapons such as those the hon. Gentleman has mentioned.

Light Aircraft (Insurance)

Mr. Michael McNair-Wilson: asked the Secretary of State for Trade whether he will seek powers to make the possession of third-party insurance compulsory for the owners of light aircraft.

Mr. Clinton Davis: The insurance of light aircraft against third-party risks is the subject of current consultation between my Department, the Civil Aviation Authority and representatives of owners and operators. It would be premature


to anticipate the outcome of these discussions.

Mr. McNair-Wilson: Does the Minister agree that the financial consequences for a pilot's dependants can be catastrophic if he is not adequately insured in the event of his death while piloting an aircraft or while carrying passengers in an aircraft? What sort of third party cover does the Minister have in mind?

Mr. Davis: I entirely agree that failure to insure or failure to carry a sufficiency of insurance could have calamitous results. I am concerned about the matter, but the risks that have hitherto been embraced do not seem to cause us to enter into any panic about the situation. As the hon. Gentleman will know, there is absolute liability. What I and the CAA are seeking to encourage is that pilots should take out insurance to a value of £100,000. That, on expert opinion, would seem to be the right sort of figure. I hope that we shall obtain an effective response and that it will not be necessary to introduce legislation.

Arab Trade Boycott

Mr. Leslie Huckfield: asked the Secretary of State for Trade what representations he has received from British companies about the operation of the Arab trade boycott; what replies he has sent; and whether he will make a statement.

Mr. Deakins: I regret that I cannot quote individual cases, but the Department has received representations from United Kingdom companies which are worried by the effects of the boycott. Her Majesty's Government deplore all trade boycotts other than those internationally supported and sanctioned by the United Nations, and while the position is explained to interested traders any subsequent decision is a matter for the commercial judgment of the firm concerned.

Mr. Huckfield: I thank my hon. Friend for that rather resounding declaration. I welcome the terms in which it was made. Has his Department taken note of and studied the effects of current American legislation against the Arab boycott? Does he think we should introduce similar legislation?

Mr. Deakins: Yes, my Department is aware of American legislation, but we are not certain that if similar legislation were introduced in this country it would be likely to be effective or add much to our knowledge of the working of the boycott. It would also add to the already heavy burden of documentation placed on our exporters. So far as I am aware, the existence of the legislation does not prevent American exporters from providing boycott declarations.

USSR

Mrs. Renée Short: asked the Secretary of State for Trade if he will pay an official visit to the USSR.

Mr. Shore: I plan to visit the Soviet Union in May this year for the fourth meeting of the Anglo-Soviet Joint Commission.

Mrs. Short: I thank my right hon. Friend for his reply. May I suggest that he tries to go a little earlier in view of the success of the Prime Minister's mission, which ends today, and in view of the fact that the expanding trade with the USSR which is available to us would go a long way to offsetting our appalling trade deficit with the Common Market? Will my right hon. Friend bear in mind that Britain is now about seventh in order with the Soviet Union whereas we used to be first among all the Western European countries—a position now held by West Germany?

Mr. Shore: Our trade with the Soviet Union has been at a regrettably low level for a long time, considering the size of its industrial base and the size of our industrial base. Like my hon. Friend, I very much welcome the obvious success which my right hon. Friend the Prime Minister has enjoyed in his visit to Moscow. Whether that should incite me to visit Moscow ahead of the Joint Commission is a separate matter. A great deal of work has been done and we shall follow it up as necessary. However, I have definitely in mind the Joint Commission meeting in May.

Mr. Costain: When the right hon. Gentleman goes to Moscow, will he correct the impression given by the Prime Minister during the playing of the national anthems and take off his hat and not keep it on, which the Prime Minister did, as we saw on television last night?

Mr. Shore: I cannot comment on the incident because I did not see it. However, I think that the hon. Gentleman's intervention was extraordinary and rather unworthy.

Export Promotion (EEC Countries)

Mr. Tim Renton: asked the Secretary of State for Trade what advice, in the light of the EEC negotiations, his Department is giving to British exporters seeking to establish new sales outlets in the Common Market.

Mr. Deakins: The full range of the Department's export services continues to be available to such exporters. The current renegotiation of the terms of our membership of the EEC has in no way weakened our encouragement to exporters.

Mr. Renton: Does not the Under-Secretary of State think that his Department should explain to exporters the likely effect of the EEC negotiations leading, as the Secretary of State for Trade wishes, to Britain's withdrawal from the EEC? Is it not a fact that British exporters who are starting new sales outlets in the EEC may find themselves without the tariff advantages which they now expect to enjoy?

Mr. Deakins: I do not accept that the present uncertainties about membership seriously limit the value of the advice which my Department can give. In the event of a decision being taken to withdraw—and that obviously is by no means certain—I am confident that Europe must continue to be a major market for all British exporters.

Mr. Body: Is the hon. Gentleman aware that many business men who have exported to the Continent for many years are getting quite desperate about the increase in documentation, or plain bumf, occasioned by our entry to the EEC? Many of them look back almost nostalgically to the days before we entered when it was easier to export than now.

Mr. Deakins: We are aware of the difficulties resulting from complicated documents not only in the EEC but in other markets. I can assure the House that my Department is working with our

partners in the EEC and other parts of the world to standardise, on an international basis, trade classification and other documentation procedures to speed up the flow of exports, which must be in the interests of all of us.

EEC and EFTA Countries

Mr. Roper: asked the Secretary of State for Trade what was the average monthly deficit in 1974 on an Overseas Trade Account basis in United Kingdom trade with the eight other members of the European Community and with EFTA.

Mr. Shore: £185 million and £63 million respectively.

Mr. Roper: Does my right hon. Friend agree that the figure for the European Community contains a significant oil element? Does he also agree that, as the EFTA population is only one-fifth of the EEC population, we did rather worse on a population basis with EFTA than with the EEC last year?

Mr. Shore: I agree that the figure for trade with the European Community contains an oil element, but it is relatively small in the context of our total trade with the EEC. The EFTA deficit is larger than I would wish and reflects almost wholly the doubling of the price of forest products of all kinds, for which EFTA is our principal source of supply.

Mr. Blaker: The right hon. Gentleman said that the figures should be treated with the most scrupulous care. Does he recall that at the end of October in his departmental publication his statisticians gave their reasons for our deficit with the EEC but they did not mention membership of the Community as being one of them? When will the right hon. Gentleman do as he has been asked and publish the facts on which he bases his insinuations that our membership of the EEC is the principal cause of the size of our deficit?

Mr. Shore: I have not said that. The only conclusion I can draw from what the hon. Gentleman said is what the House would expect, and that is that there is no censorship wihin the Department of Trade. If the statisticians of the Department wish to draw attention to certain factors and features, I am perfectly happy that they should do so.

Japan (Motor Vehicles)

Mr. Hal Miller: asked the Secretary of State for Trade if he is yet in a position to make a statement about the imbalance in trade in motor vehicles between the United Kingdom and Japan for 1974.

Mr. Hoyle: asked the Secretary of State for Trade if he will restrict the import of Japanese cars in Great Britain.

Mr. Deakins: The imbalance narrowed last year mainly as a result of a fall of 11 per cent. in imports and now amounts to £61 million. I look forward to a further reduction in 1975, now that the British industry is better able to meet demand at home and abroad. I have no proposals for import restrictions.

Mr. Miller: Has the Minister studied recently the prices of Japanese cars in this country, particularly in view of the rate of inflation in Japan? If he has not made such a study, will he accept that it would show that there is cause for fear about dumping? Will he make such a study?

Mr. Deakins: I do not think that it is for the Department to undertake the study. It is for the British industry or the Society of Motor Manufacturers and Traders to undertake such a study in support of any claim they may wish to make that Japanese motor cars are being dumped here or subsidised. If and when we receive such evidence, we shall obviously give it very serious consideration.

Mr. Hoyle: Will my hon. Friend inform the Japanese Government that in the present depressed state of the market we cannot continue with the situation in which for every British car imported into Japan the Japanese export 100 cars to Britain? Will he inform them that if that situation continues he will reconsider his decision and impose quotas on Japanese cars?

Mr. Deakins: If my hon. Friend's comments were based on the feeling that the fault lay entirely with the Japanese, there might be a case to answer, but I can assure him that the major reason why we have not exported many cars to Japan has been the shortage of capacity in this

country. In this connection I refer my hon. Friend to a statement by the Deputy Chairman of BLMC on the radio on 2nd February when he said:
Up to now we have not tried"—
that is, selling cars to Japan—
because we have not had the vehicles available.

Mr. Shersby: The House will be glad to hear the Minister's comments about dumping. Would it not be wrong to extend any protection to a British industry which is suffering from inflationary wage settlements?

Mr. Deakins: I have every confidence in the British motor car industry as a result of trips that I and my right hon. Friend have made to various markets abroad. There have been no complaints to me while overseas about quality, reliability or price The main complaints have been about delivery and the shortage of capacity in Britain.

Mr. Edelman: Has my hon. Friend any information about reported Japanese intentions to export completely knocked down cars to Britain on a large scale? Will he investigate this matter in order to ensure that this method is not used to conceal dumping?

Mr. Deakins: I have not heard the reports and I am grateful to my hon. Friend for drawing my attention to the matter. If those reports were correct I do not think that the company concerned would be acting wisely or realistically, and I would consider any evidence put to me about unfair trading practices such as dumping.

Manufactured Goods (EEC Countries)

Mr. Ovenden: asked the Secretary of State for Trade if he will show the average level of tariffs imposed on United Kingdom imports of manufactured goods from EEC countries at the present time and prior to United Kingdom membership of the EEC, the corresponding figures for United Kingdom exports to EEC countries and the present value of the trade involved in each direction.

Mr. Shore: The average levels before accession were estimated to have been 10 per cent. for United Kingdom imports and 8½ per cent. for EEC imports. These


have now been reduced to 4 per cent. and 3·4 per cent. respectively. In 1974 United Kingdom exports to and imports from the EEC Six were £3,813 million and £5,759 million on a balance of payments basis.

Mr. Ovenden: Does my right hon. Friend agree that the figures he has given, together with the figures he gave earlier this afternoon, demonstrate once more that the balance of advantage in this arrangement has accrued to the EEC countries and not to us? Will he therefore confirm my view that if Britain should decide to withdraw from the Common Market it is most unlikely that the EEC countries would act against their own interests in restoring tariff barriers and, therefore, that the point about tariff barriers should not be taken seriously in the debate about Britain's continued membership?

Mr. Shore: Undoubtedly in the early period of our entry into the EEC the balance of advantage in trade has clearly been gained by the other countries. That is the general picture. Of course I wholly agree with my hon. Friend when he says that there would be very strong reasons on both sides of the Channel for maintaining a free trade arrangement if the British people decided to withdraw.

Mr. Dykes: Why does the right hon. Gentleman keep rabbiting on about the terrible EEC deficit? [HON. MEMBERS: "Because it is true."] Will he say why he disagrees profoundly with the Prime Minister, who said quite categorically on 14th January that both sides of the House had always expected that in the initial period there would be a deficit situation as United Kingdom exporters built up their trade?

Mr. Shore: I seldom disagree with my right hon. Friend the Prime Minister, but on that occasion I think he must have been revealing his well-known generosity of character in being so kind to the Opposition.

Food and Live Animals

Mr. Hurd: asked the Secretary of State for Trade what proportion of the United Kingdom deficit with EEC countries in 1974 arose from trade in food and live animals.

Mr. Wyn Roberts: asked the Secretary of State for Trade by how much the trade deficit in food and live animals has increased in percentage terms between (1) the United Kingdom and the six original members of the EEC and (2) the United Kingdom and the rest of the world between 1971 and 1974.

Mr. Deakins: In 1974 the crude trade deficit—that is, the difference between exports valued fob and imports valued cif—in food and live animals with the Six accounted for 33 per cent. of our crude trade deficit in all goods with the Six. Between 1971 and 1974 the crude trade deficit in food and live animals increased by 297 per cent. The corresponding figure for the rest of the world is 37 per cent.

Mr. Hurd: Will the hon. Gentleman help the House by relating that answer and the Secretary of State's earlier answers to the answer given by the Secretary of State for Prices and Consumer Protection last week that food Prices in this country were now rather lower than they would be if we were outside the EEC? Is not the only way of reconciling these two Government statements to agree that our food importers have been switching on a massive scale to supplies within the EEC as these are cheaper and more secure?

Mr. Deakins: One can draw several conclusions from the switch in our trade, but none of them has necessarily to be picked out as being more important than another. For example, it is a fundamental principle of the common agricultural policy that there is Community preference and that one gives preference to food supplies from within the Community irrespective of price comparisons between supplies inside and outside. We should also take into account the depreciation of sterling. The argument as to whether food is or is not cheaper inside the EEC was effectively answered by my hon. Friend the Minister of State for Agriculture, Fisheries and Food on 23rd January, when he gave a list of commodities in three sections: first, those for which prices were lower inside the EEC; secondly, those for which there was no significant difference; and thirdly, those for which prices were higher outside the EEC.

Mr. Spriggs: Is my hon. Friend aware that the most fundamental issue facing the


people of the United Kingdom is the facts of the case? Every Britisher must know why Britain was taken into the Common Market and whether it is in our interests to remain in or come out.

Mr. Deakins: Yes, Sir. My hon. Friend and the hon. Member for Mid-Oxon (Mr. Hurd) have raised a fundamental point which will feature largely in the referendum campaign.

Mr. Roberts: Will the Minister confirm that our total crude trade deficit with the Eight last year was £2,215 million and that food and live animals accounted for £1,224 million, which, by my arithmetic as opposed to the Secretary of State's, is rather more than half of the total trade figure?

Mr. Deakins: May I clarify this statistical confusion? Some answers are given, depending on what the questioner wants, relating to the EEC Six while others relate to the EEC Eight. The answer that the hon. Gentleman has mentioned relates to the EEC Eight. My hon. Friend's answer related to the EEC Six.

NATIONAL HEALTH SERVICE (CONSULTANTS' CONTRACT)

The Secretary of State for Social Services (Mrs. Barbara Castle): With permission, Mr. Speaker, I would like to make a statement about consultants in National Health Service hospitals.
In my statement on 13th January I told the House of the events leading up to the consultants' rejection of the Government's proposals of 20th December for a new consultant contract and their decision to start industrial action. I indicated that while two principles were not negotiable—that is, the maintenance of the existing differential between whole-time and part-time consultants, and the introduction of a system of payment by items of service—there were other aspects of the proposals which could and should be further discussed. I proposed a return to the negotiating table as quickly as possible.
The consultants responded by asking for clarification of certain points, and although sanctions were continuing, I agreed exceptionally to meetings between

their representatives and health departments' officials on 23rd January and 5th February. The clarification talks have been useful, I think, for both sides, but by their very nature they cannot reach the detailed agreement which must come as a result of negotiation. Following those meetings I wrote to the professions on 11th February explaining my position on the points the consultants' representatives put to me. I have placed a copy of my letter in the Library. I also told them that I would be happy to place copies of their replies in the Library, and this I have done.
First, let it be quite clear that a new contract is not being foisted on consultants against their will. They came to me when this Government took office and told me of their long-standing dissatisfaction with their contract. At their request I set up a working party to deal with their complaints. I was not then, and I am not now, forcing—or even urging—them to take a new contract. In common with the majority of contracts of employment for senior professional people, the present contracted commitment for whole-time and maximum part-time consultants is open-ended. It is not limited to 38½ or 31½ hours.
The purpose of my proposals of 20th December was to meet the consultants' complaint that this system did not adequately reward the very long hours many of them do. Their representatives in the joint working party had themselves asked that the consultant's present open-ended commitment should be replaced by a closed contract which would clearly define his basic commitment and ensure that additional work could be contracted and paid for separately.
The Government have accepted this principle and I believe that negotiations should be resumed in order to discuss how it should be implemented. As I told the House on 13th January, and as my hon. Friend the Minister of State spelt out again in the debate on 23rd January, we are not insisting on a precise "nine till five" formulation of the new standard contract, and we accept the need for flexibility, provided the basic commitment is specific enough for a system of extra payments to be built upon it and provided the whole-time differential is maintained.
I also attach great importance to replacing future payments of distinction awards by a new system of financial supplements which would be widely available to all consultants. The aim would be to provide financial recognition for special contributions to the National Health Service, particularly in those specialities or in geographical areas where understaffing has created difficulties. I believe there is considerable support in the profession itself for this kind of change, though here again I am willing to negotiate criteria and methods of payments which would be right for the National Health Service and fair to consultants and which would protect those who have benefited under the old scheme.
Because I recognise that many of these concepts are novel and require considerable discussion, I am anxious that our discussion of them should not hold up the Reviewd Body's repricing of the existing contract, which we want to see completed if at all possible by 1st April. The Government recognise that consultants have had to wait 12 months for their substantive review and that they are due for an increase in pay, and are ready to give the consultants the same assurances that I gave to the general practitioners.
My Department has already submitted its evidence explicitly recognising the need for pay increases, and I have now supplemented this with new figures on the present state of recruitment and the manning of hospitals in the NHS which reinforce the case. I am also today submitting evidence to the Review Body supporting important improvements in the consultants' incremental scale which would considerably shorten the scale and particularly help the younger consultants by removing the present danger of overlap between the senior registrar's and the consultants' earnings. In addition, I have told the consultants that I am willing to submit joint evidence with them on other matters to which they attach importance, such as the introduction of a London allowance for medical and dental hospital staffs and the financial recognition of family planning work. It would, of course, be necessary for negotiations to be resumed for joint evidence to be possible.
Since agreement on more fundamental changes in the existing contract will necessarily take some time, I have, as I

have already told the House, offered to invite the Review Body to price the new arrangements without commitment and at a later stage. I am also prepared to ask it to do this within the context of the present review so that the arrangements could enter into effect within the same 12 months period. But it will clearly be possible to do this only if the Review Body has some indication of the lines of the new arrangements before it reports in April on the existing contract. This is another reason why negotiations should be resumed immediately.
Any decision to lift sanctions and resume negotiations rests with the professions' committees, and I understand that they are to meet on Thursday to consider my letter and the replies I have received. I regret to inform the House that in these replies the profession's negotiators, while recognising that there is common ground between us on a number of points, conclude that a recommendation for the immediate lifting of sanctions is unlikely.
I can only hope that after considering my letter and statement today the profession at its meetings on Thursday will decide to resume negotiations and to lift its sanctions which are damaging the Health Service and causing hardship to thousands of patients. I will, of course, inform the House of the outcome.

Sir G. Howe: The right hon. Lady will appreciate that there has not been time to study the correspondence which has been placed in the Library and that her statement is necessarily long and complicated. Does she accept that I certainly express the hope that meaningful negotiations can be resumed in this difficult dispute as soon as possible?
Does the Secretary of State recognise, however, that the anxiety of the consultants does not spring from any belief that she is foisting a new contract upon them but from a belief that, however she may protest against it, the negotiations were being used as a means of eroding principles to which the consultants attach great importance and that it is therefore necessary for her to go a long way to restore the confidence of the medical profession in the genuinity of the negotiations? Will there be any provision for an independent chairman of or independent participation in the negotiations? In other words, will


any outside independent person be brought in to help to bring the two sides together? Above all, does the right hon. Lady recognise the necessity of making it plain that she is now interested in promoting the best interests of the National Health Service and of its patients and is no longer interested in promoting the pursuit of Labour Party dogma?

Mrs. Castle: Regarding the last unnecessary peroration by the right hon. and learned Gentleman, I think that, as the Labour Party was the creator of the National Health Service, we can be trusted to be the effective custodians of its interests. This is what our party policy is all about, and we are proud of it.
I was glad to note that the right hon. and learned Gentleman expressed the hope that the negotiations could be resumed. I ask him to couple that hope with the necessary corollary that sanctions which are damaging the interests of thousands of patients in the NHS can be lifted on Thursday so that those negotiations can take place.
The whole purpose of the two clarification meetings which have exceptionally taken place and of the exchange of correspondence was to reassure the consultants about certain misunderstandings which may have arisen. I recognise that right hon. and hon. Members have not yet had the opportunity of reading my letter, which has been placed in the Library today, but I am confident that when they have done so they will realise that there is no case whatsoever for refusing to get back to the negotiating table.

Dr. M. S. Miller: Is my right hon. Friend aware that the House will deeply appreciate the seriousness with which she takes this matter, her assiduous efforts to arrive at a solution to the problem and her realisation that the consultants, who in the main are dedicated men and women, have a case for increased remuneration? Will she confirm that she is adhering to the principle that consultants who serve the National Health Service full time will not be disadvantaged compared with part-time consultants who supplement their incomes in other ways?

Mrs. Castle: Yes, I can happily give my hon. Friend that assurance. I have told the consultants that, contrary to some

mythology that was spread around, I am not proposing to outlaw or to prevent them from engaging in private practice. But I have also said that part of the longstanding compromise to this effect, which was first initiated in 1948, is the existence of the differential in favour of consultants who decide to concentrate all their thoughts and energies on the NHS. It would be intolerable for me to go back on that very fair principle.
I assure my hon. Friend that I recognise that the consultants have a case for a pay increase. When hon. Members study my statement they will see the lengths to which I have gone and to which I am still prepared to go to see that their case is put fully and fairly to the Review Body in its considerations, which we hope will result in a report by 1st April. Therefore, there is no ground whatsoever for the dispute to continue.
The consultants asked for a new contract. I did not initiate it. I am not trying to impose one on them. I suggest that we should get together in giving points and joint evidence to the Review Body to get the urgent need for a pay increase met quickly and then take more time discussing the details of a complicated contract to take the place of the present contract.

Mr. Hal Miller: Does the right hon. Lady recognise that what is in question here is the career structure for consultants, that the promotion pyramid is far too broadly based, and that therefore we also have in question the number of consultants' posts? Does she recognise that, apart from the question of consultants' posts, there is still a great deal to be done to discipline the progression of consulants so that they do not believe that they have a freehold on those posts as soon as they are appointed to them? Finally, does the right hon. Lady recognise that the profession would very much hope to be allowed to put its own house in order on this aspect and that it should not be imposed by the Department?

Mrs. Castle: No, certainly not; I am not imposing. But I am offering to discuss. I agree that the scale needs shortening drastically, particularly to help the younger consultant who at present faces an overlap of the senior registrar's earnings on his own. We have been asked for our support in that respect and we


have given it. For the rest, I repeat that all these matters are for negotiation.

Mrs. Renée Short: Will my right hon. Friend confirm that, while she has made it clear to the consultants that she is not against private practice, she will continue to make it abundantly clear that she is opposed to private practice in National Health Service hospitals, which is a very different matter? Is she aware that there is great concern in the country that sanctions are being continued by the consultants and that it is to be hoped that these will end rapidly? Will she tell the House whether the merit awards in their new reincarnation, as it were, will be made public so that every doctor working in a hospital knows exactly who gets merit awards and what the amounts are?

Mrs. Castle: My hon. Friend is entirely right on the first point. I have made it clear—and the consultants are aware of it—that this Government intend to proceed with the fulfilment of the Labour Party manifesto commitment to phase private beds out of the NHS. Discussions which were separately proceedings on that matter have been interrupted because of this dispute. However, that remains our policy.
My hon. Friend is right to deplore the damage that sanctions are doing. I hope that the whole House will unitedly and loudly call for the lifting of sanctions as quickly as possible.
It is our intention that the financial supplements awarded under our proposed new system should be made public and should be on the basis of clearly defined and publicly known criteria.

Sir J. Langford-Holt: On two occasions the right hon. Lady mentioned the overlap between senior registrars and consultants. Will she make clear that it is her intention that this overalp should disappear from future arrangements?

Mrs. Castle: Yes, Obviously it is not for me to fix the incremental scale. It is for the Review Body. However, we accept that the present scale is unsatisfactory in a number of respects. It needs to be considerably shortened. We are giving evidence to the Review Body to the effect that the scale should be so

reviewed as to prevent this overlap from taking place.

Mr. Atkinson: Will my right hon. Friend accept that the great majority of right hon. and hon. Members will be ever grateful to her for making today what will prove to be a very useful statement? We all hope that the consultants will respond to the generosity of that statement by lifting their sanctions next Thursday. Does my right hon. Friend recognise that the major problem facing a conclusion of the dispute is money? We appreciate her difficulties in not being able to anticipate the outcome of the Review Body's study of this matter, but will she accept that, even if the Review Body ultimately came up with as much as a global lift of 35 per cent., that would still be within the guidelines set by the TUC?

Mrs. Castle: That would depend on the basis on which the argumentation was advanced. But I must say that the figure quoted by my hon. Friend is rather different from the one in the letter to me from the Hospital Consultants and Specialists Association, which I have placed in the Library today. That letter demands an increase of 119 per cent., "or else".

Mr. Peter Morrison: Can the right hon. Lady answer that part of the question put to her by my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) which referred to independent participation in the negotiations? Does she think that it is possible to have an independent chairman?

Mrs. Castle: I am glad that the hon. Gentleman reminded me that I had not replied to that part of the right hon. and learned Gentleman's question. The answer is "No". The proposal is to use the normal negotiating machinery. I think that the professions felt this to be right. The independent element comes in when we reach the point of pricing the contract, or the arrangements which flow from the negotiations. This is the job of the Review Body, and it is independent of the Government. There is the normal negotiating machinery—the joint negotiating committee—and it seems to us and, I think, to the professions that that is by far the best medium for negotiations.

AGRICULTURE (PRICES)

The Minister of Agriculture, Fisheries and Food (Mr. Fred Peart): I should like, Mr. Speaker, to report to the House the decisions reached last week by the Council of Ministers (Agriculture); and the Government's own determination of guaranteed prices following the Annual Review.
In my view, the most important decision of the Council was to make radical changes in the Community régime for beef. Under the new arrangements, it will be open to any member country to switch the emphasis of support away from permanent intervention and on to a variable premium, financed to a substantial extent from Community funds. The United Kingdom will take up this option. During the beef year beginning in March, the Community will pay about £47 million towards the cost of the premiums we shall pay on clean cattle sold for slaughter.
The average premium throughout the year can be up to about £5 per live cwt. but may vary above or below this figure at particular times. The total cost of the premiums will vary according to the state of the market, but at most would be about £135 million over the year. These premiums will enable the Government to assure producers of a fair return. I shall announce details of the scheme later; but my aim will be to provide an average return to producers of between £22 and £23 per live cwt.
It is an essential feature of the new arrangements that the premium cannot be paid on beef sold into intervention. This reduces the effective buying-in price to a level which will mean that support buying cannot take place on more than a limited scale.
This new system has been introduced on our initiative. I regard it as a major reform of the common agricultural policy. It gives the producer an assured return without forcing consumer prices up to unacceptable levels, and without building up mountains of frozen beef. This is the right way to give support.
The other main group of decisions concerned the level of common agricultural prices for the coming year. The increases average between 9 and 10 per

cent. They relate, however, to support prices for Community producers. Their effect on food prices in this country, together with that of the transitional step we make towards common price levels, should be less than 2 per cent.
The biggest common price increase is of 15 per cent. for sugar. As a result of monetary changes, our own sugar beet growers will benefit from an effective increase of about 17 per cent. bringing the total sugar beet price to about £16 a ton. I hope this will encourage an increase in the sugar beet acreage.
The common target price of milk is increased by 6 per cent. in March and 4·7 per cent. in September. These increases, together with the transitional step, will result in higher prices for butter and cheese; but the Council also made provision to raise the contribution from Community funds to the general butter subsidy from about £26 to about £48 a ton.
The Council also agreed on minor changes in the monetary arrangements applying to the common agricultural policy. The percentage increases in common farm prices, when expressed in national currencies, will be slightly smaller in countries with appreciating currencies and larger in countries whose currencies have depreciated. For the United Kingdom this change means a new representative rate reducing monetary compensatory amounts by 2½ points, over and above a reduction of 1¼ points which is being applied on a general basis to countries with depreciated currencies.
Finally, the Council reached agreement in principle on the Directive on Less Favoured Areas, which deals mainly with aid for hill farming. We obtained an amendment so that the payments are not reduced for pensioners, a point to which this House attached importance. The contribution from Community funds will be a minimum of 25 per cent., but this is to be considered next month with a view to an increase. I expect the United Kingdom to be a net beneficiary.
I turn now to the determinations of guaranteed prices which the Government have made in the light of the Annual Review.
First, the guaranteed price of milk will be increased by some 5p per gallon, and is expected to average about 34·75p per


gallon for the year from 1st April. The standard quantity will be increased by 50 million gallons so that it should continue to include all milk sold by the marketing boards. As a consequence, the maximum retail price of milk will be increased by 1p per pint on 2nd March.
The guaranteed prices for wheat, barley and oats will be increased to £51·80, £46·80 and £44·60 per ton respectively.
The guaranteed price for potatoes will be raised by £6 to £28 per ton.
The guaranteed price for fat sheep will be increased by 6p to 35·5p per 1b. The guaranteed price for wool will be increased by 5p to 31p per 1b.
The hill sheep subsidy will be raised by a further 60p per ewe over and above the increase made in December. The Exchequer cost of the increase in the level of support for the sheep sector in 1975–76 is estimated at about £34 million, including £9 million for continuing last December's hill sheep subsidy increases.
With the introduction of the new arrangements for beef, I propose to lay an order restoring the calf subsidy to the level obtaining before the increase of £10 made last March.
Finally, it is intended that the guaranteed price for pigs should be set at £4·03 for the period till July, when the basic price applying in this country under Community arrangements will be increased to substantially above that level.
With permission I shall circulate in the Official Report the full details of these determinations, and a note of the main economic data arising from the Annual Review. I am confident that the new beef régime, the increases in Community prices applying in this country, and the increases in our own guaranteed prices together represent a settlement that is good for our farmers and also takes due care of the interests of the British consumer.

Mr. Pym: This is a complex package which cannot be properly analysed in minutes. May I ask the Leader of the House, through the right hon. Gentleman, whether we can have a full day's debate in Government time on this arrangement, and on agriculture generally?
This package is good in parts. I welcome at once the award the Minister has announced for potatoes, sheep, wool and sugar. I share his hope that the award for sugar will lead to an increased acreage but I have some doubt whether it will be adequate.
I welcome the new beef arrangements which the right hon. Gentleman has negotiated. However, they seem to be for one year only. If that is so, is it right to regard this as a major reform? It is still short of being an absolute guarantee for beef producers, which we believe to be desirable. This is certainly a move in the right direction, but the right hon. Gentleman will be aware that his aim of achieving prices of £22 to £23 per live hundredweight is short of the break-even point. Can the right hon. Gentleman assure the House that he will continue to negotiate for a more realistic level?
The consolidation of the 7·7p together with the percentage increase for milk is to be welcomed. However, the loss of the calf subsidy, or £10 of it, and the remaining uncertainty about the future of the beef market must be subtracted from this award. It seems that the producers may or could receive less cash for their milk next winter than they received this winter. Can the right hon. Gentleman undertake that this will not be so? Is he aware that we want to be satisfied that the net effect will be to stop the decline in production and encourage a re-expansion?
Is the right hon. Gentleman aware that pig producers today are in a position that is barely viable? Since so much of the breeding herd has been slaughtered, is it not essential to restore profitability and with that confidence, to safeguard future supplies? Is he aware that I do not believe that his statement makes that clear?
Is the right lion. Gentleman further aware of the present anxiety among arable farmers and the possibility that they will become dependent on guaranteed prices in 1975? Cereals have been a saver for many farms last year. Is this not the time to jump the transitional period altogether and go straight to Community guarantees?
Why has the Minister not referred to the poultry industry? He must be aware of the crisis in the egg sector. It is no


good the right hon. Gentleman shaking his head. This statement deals with "Agricultural Prices for 1975–76". Even with a level of imports as low as 1 per cent. or 2 per cent., total disruption can be caused in the domestic market. That is just what we have seen. Will the right hon. Gentleman now negotiate and ban these imports, as the French have banned our exports?
How far does the right hon. Gentleman think that this package goes to cover the vastly increased costs in agriculture? Is he aware that those costs are agreed at about £700 million? Do the awards announced today cover much more than half those increased costs? If not may I ask whether he has any hope of stemming the decline in output and achieving the aim we all share, namely that of restoring expansion?

Mr. Peart: I would, of course, welcome a debate on this subject. It is right that we should have one. This is a complex matter. My right hon. Friend the Leader of the House deals with the business of the House and no doubt the right hon. Gentleman will be pressing him on this. I shall have a word with him.
I am glad that the right hon. Gentleman has welcomed a large part of the award. He mentioned potatoes, sheep and sugar. He criticised the calf subsidy arrangement but welcomed the milk arrangements. This is a good and big award. The right hon. Gentleman must know that the calf subsidy was only a temporary measure. It had to go. We had to do this to achieve the beef régime. The right hon. Gentleman has rightly asked whether the beef régime is a temporary arrangement, whether it is just a supplementary arrangement or a fundamental change. This is an option for all member States—

Mr. Peter Mills: For how long?

Mr. Peart: It is not a derogation on the part of the United Kingdom. It is just as much a part of the régime we have agreed as the other parts. The régime is examined every year. That was so under our own annual review procedure. This is just as important to the régime as permanent intervention for those who accept it. I hope that no one will be pessimistic about this. I believe that the

award represents a major breakthrough. I agree that there are problems in the poultry industry, especially with eggs. The Minister of State has been meeting representatives of the industry. I have still to get evidence about the question of the quantity of imports. It is not an easy matter because as members of the Community we have to be careful that we, too, are not breaking the law.

Mr. Peter Mills: They are breaking the law.

Mr. Peart: I know that that is the hon. Gentleman's contention.
Under the new arrangements there will be increased prices for pigs.

Mr. Pym: May I press the Minister a little further on this subject of milk? Can he first of all give an assurance to the House that producers will receive more cash next winter than they have received this winter? While it is true that I welcomed the consolidation of the percentage increase we have to take away the calf subsidy and the uncertainty in the beef sector. What I asked the right hon. Gentleman is whether he is satisfied that the net effect will be to expand production and stem the decline.

Mr. Peart: We had a major award which was welcomed by the industry. This is an addition. I have the detailed figures here. The United Kingdom guaranteed price for milk for 1975–76 was raised by 5p a gallon over and above an increase in the guaranteed price last October. This consolidates into the guaranteed price the 7·7p per gallon made from last October, and gives some more. This is a fine award.

Mr. Cledwyn Hughes: May I congratulate my right hon. Friend on what appears to be a satisfactory agreement and especially on his success in obtaining acceptance of the principle of deficiency payments which will, hopefully, be permanent? Can my right hon. Friend say exactly what element of intervention buying he thinks will be involved at any time? Can he, further, say more precisely what effect he thinks this agreement will have on the retail price of butter? Can he explain, dealing with the less favoured areas, how the amendments will help the pensioners?

Mr. Peart: That has been accepted in principle. I put this to the Council. The whole matter is to be examined again in a month's time with a view to giving increased support above the 25 per cent. I think this was generally welcomed by participating countries. As for this question of the premium, the main effect will be on what we call the variable premium. There is a fixed element which we still have. It is this premium which is so important. I have had discussions with the unions today. They welcome this in principle and we are working out a mechanism to determine how this should apply. We have an option to take a contribution of £10 million from the Community for the butter subsidy. This is a matter for my right hon. Friend.

Mr. Hooson: As a critic of the Minister may I first say that he deserves congratulations on what is a cautious and satisfactory review without being inspiring or a signal for expansion. Will the right hon. Gentleman reconsider the question of increases in sheep prices? On the face of it they appear to be considerable—6p a lb. on lamb and 5p a lb. on wool—but this has long been the Cinderella of the farming industry. Is he aware that figures disclosed this week show that at present prices, the transport costs for carcases of New Zealand lamb will be double the price received by the farmer in New Zealand next year? Does the right hon. Gentleman think that he has done enough to bring about expansion in the sheep sector? Personally, I do not think he has done enough.
Secondly, in regard to fertilisers, expansion depends on getting greater production from the hills. The Conservative Government removed the subsidy on basic slag. Why has not the Secretary of State put back to the subsidy during this review?
Thirdly, in the light of the fact that the review is said to recoup only half the increase in costs, will the Secretary of State undertake to keep the matter under review throughout the year? If there is a greater escalation in costs, the review may not look so good. Although it may turn out that nothing will need to be done, will he give an undertaking that he will be prepared to review the matter again in the autumn?

Mr. Peart: I am grateful for what the hon. and learned Gentleman said at the outset of his supplementary question in regard to the review. On the question of sheep and wool, the United Kingdom guarantee price for sheep has been increased by 6p a pound to 35·5p per pound. That is an increase of over 20 per cent. for sheep, and for wool the figure goes up by 5p per pound to 31p, which, again, is nearly a 20 per cent. increase. These are considerable increases, and I am certain that the hill farmers in the North-West will welcome this increase. We must also recognise that the hill sheep subsidies are being increased by 60p per ewe on top of the large increase last September. I think that that will inspire the necessary confidence. Obviously, I am prepared to take a continuing look at these matters after seeing how things work out in relation to guarantees and prices. I note what the hon. and learned Gentleman said.
On the question of slag, I find it difficult to restore subsidies once they have been removed. I restored the lime subsidy, but I have not brought back the fertiliser subsidy. I made a decision and at this stage I thought that we should concentrate on other matters. I shall look at the matter carefully.

Mr. Torney: May I crave indulgence to congratulate my right hon. Friend—[HON. MEMBERS: "Oh."] Wait for it. I was about to congratulate him, within the straitjacket of the Common Market, on having carried out an exceedingly good job. How will the variable beef premium work out throughout the year? In view of the strong feelings on the Labour benches on the question of intervention will he explain how much intervention he had to agree to in securing these agreements? On the subject of poultry, is my right hon. Friend aware that what the Tories are asking for—namely, a ban on imported poultry—is quite outside his control because the Tory Party took us into the Common Market and thereby precluded us from having, the power to stop the import of eggs?

Mr. Peart: In regard to the working of the variable premium, I have already stated that the premium will not be paid on intervention beef. There will not be


a United Kingdom beet mountain. I have always accepted a modest form of intervention as support. Member States then have an option, which some will not use but we have it. We believe that it could apply to other member States. For that reason we do not rely on permanent intervention. I have already answered a question about eggs.

Mr. Marten: The Secretary of State spent a good deal of time in Brussels on the price review. Would it not have been better if we had had a purely national price review?

Mr. Peart: We have had a part national review. The simple fact is that this is the situation we have had to face. I know that the hon. Member for Banbury (Mr. Marten) holds certain views, but I believe that it is right that while we are in the Community I should go and negotiate what I think is in the best interests of our farmers.

Mr. Buchan: Will my right hon. Friend say what cost will have to be borne by the agricultural industry? Is it about £700 million, as suggested? Secondly, although I join my hon. Friend the Member for Bradford, South (Mr. Torney) in congratulating my right hon. Friend in what he has achieved in the course of ongoing negotiations, particularly in the beef sector, is it not the case that this is a rather unnecessary exercise imposed upon him at present by our membership of the CAP and can hardly be said to bring us one iota forward in restructuring the CAP as laid down in our manifesto?

Mr. Peart: I can give the exact figure. It is, so far as we can estimate, £692·1 million. If my hon. Friend examines the matter carefully he will see that what we have achieved is a deficiency payment. How he can say that we have not made any advance on a system which relies purely on permanent intervention is beyond my comprehension. This represents a big advance. I hope that my hon. Friend, who believes in our party's manifesto, as I do, will accept the situation.

Sir David Renton: Did not the right hon. Gentleman's experience in these negotiations reveal to him that the CAP, far from being a straitjacket, lent itself

to flexibility in negotiation? Was it not that factor which enabled him to obtain the advantages about which he told the House this afternoon? Therefore, in the light of his experience, would it not be crazy from the point of view of the British farmer to come out of the CAP?

Mr. Peart: I shall not comment on the future. All I can say is that I have achieved something which is quite different from the system which has been operating in the Community. I hope that my Labour colleagues will accept this. Added to that situation, I have tried during day-to-day business and in terms of renegotiation to take the view that we must introduce a measure of flexibility into the CAP. I have attempted to do this, and it is no good burking that fact. This is one example of where I have achieved something. Therefore, I hope that the House will accept it.

Mr. Powell: Is the change in the beef régime intended to be permanent? Will the Government ensure that it is embodied in some more permanent instrument than will emerge from an annual negotiation? Secondly, if it is a satisfactory régime for that commodity, is it intended to extend the régime to other commodities?

Mr. Peart: Beef is quite different from other commodities. One must judge each commodity separately. Anybody who knows the farming industry knows that one cannot apply a rigid rule to all commodities. One system may work well, whereas another may not work well. Therefore, I hope that I should not be expected to enter negotiations in the Community on that basis. Apart from that, I have made the statement. It may well be that this matter will be referred to in the final renegotiations. I cannot say at this stage. This is as secure an arrangement as I can possibly achieve.

Mr. Jay: Although I am sure my right hon. Friend has done his personal best in the circumstances, will he not agree that, apart from the welcome arrangement on beef, which is of rather doubtful permanence, so far there has been no major reform of the CAP and no material change in the Treaty of Accession?

Mr. Peart: I hope that my right hon. Friend has read my party's manifesto. If he has, he will see that we argue that


we want a deficiency payments system. We have never acepted permanent intervention. We have made an achievement and I do not know why my right hon. Friend should cavil.

Mr. Peter Mills: Will the Minister consider again the subject of milk? Does he not realise that he has done nothing like enough to restore confidence in the industry? If he looks at the facts in regard to the drop in the number of inseminations, he will realise that what the Department has done will do nothing to restore the position in the dairy industry. What is needed is a sum of 3p to 4p a gallon on top of the winter price—for, unless he awards this figure, I believe that we shall not get the milk which the consumer requires.

Mr. Peart: The hon. Gentleman is being too pessimistic. He knows that the dairy producer has got the highest award he has ever had and that it is a reasonable award. What I have announced today is additional to that. Therefore. I hope that the hon. Gentleman will not spread gloom around but will appreciate that this is a good award.

Mr. Spearing: My right hon. Friend has mentioned that the variable premium scheme for beef may cost up to £135 million. Will he clarify for the House how he will decide whether that will be not available for intervention? He said that this money will not be available for intervention buying. Will he decide, or who will decide, and on what basis, whether beef will be given the premium or whether it will be put into intervention?

Mr. Peart: The mechanics will be decided by Her Majesty's Government. I stated earlier that I have had meetings with farming unions today and we have agreed to work out details which we see as essential in order to give long-term security in relation to beef production. In relation to the application of the variable premium, relating it to seasonal needs, we think that this is the right way to go about it. It will be decided by Her Majesty's Government.

Mr. Hawkins: Will the right hon. Gentleman say whether the figure he mentioned for sugar beet of £16 a ton includes the allowance for haulage and the allowance for pulp, because, if so, I

can tell him that he will not get the full acreage which he requires and which he stated the other day should be 500,000 acres?

Mr. Peart: I have looked at the haulage question, I but I think that it does not include that. All that I can say is that the full Community price in effect is here, and we get the old common price plus 15 per cent.

Mr. Corbett: Will my right hon. Friend say something about the impact of his statement today on the industry in Northern Ireland? Will he further build on the efforts he has made to encourage the industry to sit down now and plan for the growth that we very much need in order to guarantee that we can feed the people of this country and cut down on our imports?

Mr. Peart: On Northern Ireland, I had a Northern Ireland official with me. I have discussed matters today with the Northern Ireland farming leaders as well, and I recognise that there are problems affecting Northern Ireland, regarding the relationship with Eire in relation to the representative rate. I accept that, and we are having discussions with them to make sure that their industry in Northern Ireland is not harmed.
I was asked about the long term—and I would agree about the need for a long-term policy. I hope that all hon. Members, of all parties, would want a long-term policy. I hope to produce very soon a White Paper on this matter. I believe that this price review and what we have achieved in relation to the beef régime will help considerably to provide confidence.

Mr. Charles Morrison: The right hon. Gentleman said that the costs had increased by £692 million this year. He did not give the value of the determinations he has just announced. What estimate has he made, also, for increased costs in the forthcoming year? Is he aware that unless returns are, at worst, in line with increased costs, there is no hope of any increase in production?

Mr. Peart: I gave that cost figure. I could not go beyond that. It is too far ahead. I understand the concern, however, and we shall keep a continual watch. It will affect different sections in different ways.

Mr. Maude: I welcome the moves that the Minister has made towards a more satisfactory return for producers of beef, milk and other commodities. However, will he say whether he and, equally important, the farming unions regard this price review as the basis for a genuine expansion in home production of food, which is so important not only from a balance of payments point of view but also in releasing our imports of food for the Third World—or will it simply have the effect at the same time of increasing Community imports into this country, such as French eggs?

Mr. Peart: The question raised by the hon. Gentleman is perfectly valid. I have met farming leaders, here and in Brussels. On the Brussels negotiations—the part which affected the United Kingdom—I think there was broad agreement. I met today farming leaders from Scotland, Northern Ireland and England and Wales. I get the impression that they think it is a step forward. On the other hand, they are holding their council meeting this afternoon, and no one could predict how they will react. I hope that they will recognise that this is something reasonable.

Mr. Lee: Do I understand my right hon. Friend to say that the Community's minimum contribution was 25 per cent. but that he was aiming for a good deal more? How much is he hoping to secure, bearing in the mind that the greater the contribution, the more we shall be dependent upon them in respect of their influence upon our policy if for any reason we stay in the Common Market and then incur the disfavour of the Common Market community?

Mr. Peart: I am not sure what my hon. Friend means by the 25 per cent., and whether he means that it is in relation to beef.

Mr. Lee: The contribution.

Mr. Peart: The Directive concerning less-favoured areas? I believe they have

decided to do that; they have accepted it in principle. We shall meet again next month with a view to upping that amount.

Mr. Wiggin: Will the right hon. Gentleman answer the question of my hon. Friend the Member for Devizes (Mr. Morrison)? Will the farmers be better off as a result of this price review? The right hon. Gentleman has calculated their costs, but he refuses to tell the House what this award is worth.

Mr. Peart: Yes, I believe they will be better off. Much of this depends on how the market works out. I shall not stick my neck out on something theoretical. I do not indulge in hypothetics. One gets one's fingers burned like that. I do not know how the market will go; no one does. But I believe that this points the way.

Mr. John Davies: In telling us what the anticipated effect on food prices would be the Minister did not include, I think, the element for monetary compensation amount differential. What will be the effect on this country of than change in monetary compensation amount?

Mr. Peart: I mentioned that. I did not give a specific figure. I believe that it will be about 1 per cent.

Mr. Pym: Is it not imprudent for the Minister to give the impression that the new beef régime is a permanent feature of the CAP when, I think, it is not?

Mr. Peart: I have tried to show that it is as permanent as anything can be permanent—[HON. MEMBERS: "Oh."] "Of course it is: in the same way as intervention is permanent intervention, accepted by other sections. It is as permanent as it can be.

Several Hon. Members: rose—

Mr. Speaker: I am sorry that I have not been able to call every hon. Member who rose, but I shall remember those


whom I have not called when we come to the debate.

Following is the information:




1974–75
1975–76




Determination at 1974 review
Revised determination
Determination at 1975 review
Increase over 1974 review determination
Increase over revised 1974–75 determination


Wheat (per ton)
…
£39·62
£42·97*
£51·80
£12·18
£8·83


Barley (per ton)
…
£35·73
£38·78*
£46·80
£11·07
£8·02


Oats (per ton)
…
£34·20
£37·12*
£44·60
£10·40
£7·48


Potatoes (per ton)
…
£22·00
No change
£28·00
£6·00
—


Pigs (per score dwt.)
…
£3·49
£4·03†
—‡
—
—


Sheep (per lb. edcw.)
…
29·50p
No change
35·50p
6·00p
—


Wool (per lb.)
…
26·00p
No change
31·00p
5·00p
—


Milk (per gallon)
…
26·27p
29·74p§
34·75p≑
8·48p
5·01p


* It was announced on 17th July 1974 that the 1974–75 guaranteed prices for wheat, barley and oats were raised to £41·27, £37·26 and £35·67 respectively in the light of increases in CAP prices agreed in March. These guaranteed prices have been further raised in the light of the decisions of the EEC Council of Ministers in September-October 1974.


† The revised determination is effective from 28th October 1974.


‡ The pigs guarantee is to be terminated after 27th July 1975 in accordance with the Act of Accession.


§ This is the estimated average effective level of the guarantee, taking account of the increase in the guaranteed price to 29·79p per gallon at the beginning of October 1974, following the 5 per cent. increase in CAP prices then agreed, and the introduction of a special additional payment of 4·18p per gallon at the same time.


≑ Average. The guaranteed price will be related to a standard quantity of 2,950 million gallons. It is intended to assure the Boards an average price of 34·0 pence per gallon for production during the period 1st April-15th September 1975 and 35·5 pence per gallon on the remainder of the standard quantity or on the residue of production whichever
is the less.




MAIN ECONOMIC DATA


1. Income, output and productivity


The figures in the following table update the series shown in Table 18 of the 1974 Annual Review White Paper and incorporate revisions to the figures in the earlier years:




ALL COMMERCIALLY SIGNIFICANT HOLDINGS


June-May years




Net Income at current prices
Net Product at constant prices
Labour Productivity


Year
Actual
3-year moving average
Index
Index






1964–65–1966–67
1968–69–1971–72
1964–65–1966–67
1968–69–1971–72




£m.
£m.
=100
=100
=100
=100


1970–71
…
610
618
111
102
137
104


1971–72
…
684
718
—
110
—
115


1972–73
…
861
943
—
111
—
117


1973–74
…
1,283
1,092
—
117
—
126



(1194)*



1974–75 (forecast)
…
1,133 
—
—
117
—
131



(1159)*



* Adjusted to normal weather conditions.

2. Gross capital formation


Year
In plant machinery and vehicles
In buildings and works
Work-in-progress and stock valuation changes
Total





£m.
£m.
£m.
£m.


1970
…
…
133
117
116
366


1971
…
…
152
133
157
442


1972
…
…
192
159
202
553


1973
…
…
231
209
389
829


1974 (forecast)
…
…
309
266
430
1,005


3. Aggregate cost changes


Net cost change relating to all products: +£692·1 million.


4. Public expenditure


Public expenditure under the common agricultural policy and on national grants and subsidies in 1975–76 is estimated at £306 million. This figure is subject to Parliamentary approval of the Estimates and does not take account of the Review determinations.

HOSPITALS (SUTTON AND CHEAM)

Mr. Macfarlane: On a point of order, Mr. Speaker. I am sorry to take up the time of the House, but I should be grateful for your guidance and intervention on a matter which has been causing me some concern since 5th November 1974, when I raised under the Adjournment debate procedure the future of the Belmont and Henderson Hospital site, which is of acute concern in my constituency.
During the course of the reply which the Minister gave, he said, as reported at column 1036 of Hansard:
Otherwise offer of the property must, in accordance with the rules for disposal of Government land, go first to other Government Departments, then to the London Borough of Sutton and to the Greater London Council."—[Official Report, 5th November, 1974; Vol. 880, c. 1036–37.]
I believe that what was stated during that debate was that the land would be first offered to other Government Departments, then to the London Borough of Sutton, and then to the Greater London Council. I believe that there have been certain omissions and errors because the statement was not accurately recorded and reported by Hansard.
That is the problem that I wish to raise, Mr. Speaker. You will understand that it is of critical importance to me in that the omission of the word "then" in fact means that the London Borough of Sutton would not enjoy first priority and first refusal of the land.
My hon. Friend the Member for Pudsey (Mr. Shaw) was with me on that occasion. As we left the Chamber, he said, "Well, you have received the assurance you were seeking." There were also four or five constituents of mine in the Public Gallery on that occasion, from the constituency, who were indeed pleased to receive that assurance.
Finally, I had a letter some weeks after this from a Liberal Greater London councillor, saying:
I think you would like to know that some weeks ago I wrote to the Minister asking him for clarification of the sentence in Hansard which refers to the order in which land surplus to Government Departments' requirements is offered to other authorities. I attended your Adjournment debate and did not think the

words reflected what the Minister had said at this point. I would be interested to have your comments".
That is from a councillor who is not of the same political opinion as myself. I should be grateful for your assistance, Mr. Speaker.

The Under-Secretary of State for Health and Social Security (Mr. Alec Jones): Further to that point of order, Mr. Speaker. Certainly I should be saying an untruth to the House were I to suggest that I could remember exactly what I said in an Adjournment debate on 5th November. But I have gone through the file which the Department keeps on the matter, and I have a copy in front of me of the exact speech notes I used on that occasion. All that I can confirm is that the words in Hansard are the exact words printed in the speech notes I used on that occasion, and there was certainly no intention on my part to mislead the House or the hon. Gentleman. In fact, I thought that what I had clearly indicated was that the offer of land would go to the London Borough of Sutton and to the Greater London Council jointly, because in fact, if one reads on to column 1037, one finds that I referred specifically to both of them having urgent housing needs. I can find no evidence to suggest that I in any way misled the House or attempted to do anything about the report in Hansard.

Mr. Macfarlane: Further to that point of order, Mr. Speaker. I believe it has been established that there has been an omission from the Minister's reply. I believe that this statement would establish an important principle, and consequently I must refer to the half-dozen constituents and the councillor not of my political opinion who were present and who felt that the Minister distinctly said then—

Mr. Speaker: Order. The hon. Member has dealt with that. I have heard what he has said, and what the Minister has said, and I shall consider the matter.

STATUTORY INSTRUMENTS

Ordered,
That the Civil Aviation (Navigation Services Charges) (Fifth Amendment) Regulations 1975 (S.I., 1975, No. 122) be referred to a Standing Committee on Statutory Instruments.—[Mr. Pendry.]

Orders of the Day — INDUSTRY BILL

Order for Second Reading read.

Mr. Speaker: Before I call the Secretary of State for Industry to move the Second Reading of the Bill, I should tell the House that we have already lost an hour of the time that should have been available to debate this measure. An extra hour has been allowed for today's debate, but more than 40 hon. Members want to speak. I hope, therefore, that even though this is a two-day debate and we have the extra hour, Members will be reasonably brief in their speeches.

4.31 p.m.

The Secretary of State for Industry (Mr. Anthony Wedgwood Benn): I beg to move, That the Bill be now read a Second time.
This Bill, based on policies long advocated by my right hon. and hon. Friends and clearly set out in our manifestos, contains the Government's proposals for far-reaching democratic Socialist reforms affecting the relations between the community, management and workers and is designed to deal direct with the problems of manufacturing industry that lie at the heart of Britain's present industrial and economic weakness.
The reforms contained in the Bill have three prime objectives. The first is to reverse the long decline in British manufacturing industry by providing a new and important source of public investment which in its turn will help to sustain and expand employment. The second is to inject both the national and the regional interest, and the interests of working people, into the strategic decisions made by major industrial firms, and to improve our use of existing plant and equipment. The third objective is to extend industrial democracy in those firms to make them more accountable and thus help to bring about the shift in the balance of power towards working people which we see as a prime necessity if our underlying problems are to be overcome. I should add that we intend to meet these objectives by winning active support for these policies.
The Bill provides for the development of new instruments for those purposes. First, it extends and strengthens the Industry Act 1972 which we inherited from our predecessors. We are proposing that the power to acquire up to 100 per cent. of the shares of a company by agreement, which had been limited to assisted areas, should be extended to the country generally, and to remove the restrictions imposed by the old Act which made a public shareholding possible only as a last resort. We are also making it possible for these shares when acquired by the Government to be retained, since in our view, if public money is to be invested in private firms, it is reasonable that the taxpayer should benefit fully from his investment.
We are removing the time limit on Section 8 of the Industry Act under which it would have expired in 1977. We are retaining the Industrial Development Advisory Board, and I shall shortly be announcing some fresh appointments to it, but I must make it clear to the House that the responsibility for reaching decisions rests with the Minister, who is accountable to the House of Commons, and I have no intention whatever of shielding behind outside advice or of avoiding my responsibilities for policy decisions.

Mr. Norman Atkinson: I apologise for intervening so early in the debate, but an important aspect of the whole legislation is to whom the Minister is to be accountable. Is he to be accountable to the House, or to the Commissioners in Europe? Will those Commissioners have a right of veto, and will they be subject to any control by the Council of Ministers? What is the position concerning the provisions which my right hon. Friend has just announced? Will this House be free to come to a decision on these matters?

Mr. Benn: I shall deal with the Industrial Development Advisory Board. I do not want to touch on matters of renegotiation, but my hon. Friend will know that Articles 92 to 94 of the Treaty of Rome, coupled with Article 189, make its regulations applicable in this country and that Section 2 of the European Communities Act means that the Bill when enacted will be subject to the provisions of those articles in the treaty.
The Bill also establishes a National Enterprise Board with the functions and powers set out in Clauses 1 to 8, which give it the power to work anywhere in the United Kingdom, including Northern Ireland.
Clause 2 specifies the purposes, functions and powers in greater detail, based upon the policy contained in the White Paper published last August. As the sponsor of the Bill and the new Board, the Secretary of State will be accountable to the House of Commons for the work of the board, because with the power to give specific directions contained in Clause 6 the accountability will be greater than for a normal nationalised industry.
The board will also work under the general supervision of the Government, in exactly the same way as the Bill and the White Paper on which it is based were subjected to detailed collective scrutiny and approval before they were published.
The National Enterprise Board will have an initial statutory tranche of £700 million with power to increase this amount if Parliament approves to £1,000 million. This sum is, of course, additional to the £550 million provided for under Section 8 of the 1972 Industry Act, subject to parliamentary approval for successive tranches, and an unlimited sum already provided by statute under Section 7 of the 1972 Act.
The National Enterprise Board will have no compulsory powers of acquisition. The White Paper set out the Government's specific nationalisation proposals, which will be dealt with by normal legislative process separate from the National Enterprise Board.
The Board will have responsibility for promoting industrial democracy, which we believe must develop organically out of the needs, experiences and aspirations of those who work within the firms in which the NEB will participate.
Clauses 9 to 13 provide powers in relation to the transfer of control of important manufacturing undertakings to non-residents, and these powers should be welcomed in present circumstances.
Clause 14 deals with Planning Agreements which, though voluntary in character, will provide that regional development grants under them will not

be reduced during the lifetime of each Agreement. This is an important response to the demands from industry that there should be greater certainty in its dealings with the Government.
The Planning Agreements will, we believe, allow us to move towards a more successful and constructive tripartite dialogue between Government, management and workers in the firms concerned, and managements will also get the benefit of greater disclosure of Government forecasts to help them in their own planning. These Government forecasts will be more likely to be accurate because they will be based upon a greater disclosure from the firms.
Clause 15 amends the Industry Act along the lines that I have already indicated.

Mr. Douglas Jay: Before my right hon. Friend leaves the subject of Clause 14, which refers to regional policy, will he assure the House that the Government's powers under this clause, and the regional policy generally, can be exercised without the permission or without the interference of the EEC Commission?

Mr. Benn: My right hon. Friend is probably the greatest expert in regional policy in the House of Commons and he also knows the Treaty of Rome. He also knows, that all regional policy, in so far as it involves State aid, is subject to the European Commission and to the articles to which I referred when answering my hon. Friend the Member for Tottenham (Mr. Atkinson). In our manifesto the Labour Party referred to the "Draconion curtailment of parliamentary powers".
I now come to Clause 15, which amends the Industry Act.

Mr. Peter Rost: On the question of Planning Agreements, what provisions will be made to ensure that confidential information from companies will remain confidential?

Mr. Benn: I shall come to that in a moment. I am now dealing with the clause which concerns Planning Agreements and I shall come to disclosure in a minute.
Clauses 16 to 18 increase the limits on ships and off-shore installations from the


£1,400 million, provided by the previous Government, to £1,800 million.
Clause 19 raises the discretionary powers of the National Research and Developme nt Corporation to deal itself, with certain projects, without detailed ministerial oversight.
Clauses 20 to 24 deal with the disclosure of information by firms both to Government and workers, subject to safeguards for the national interest, and provides for arbitration where the release of sensitive commercial information is at issue between the firm and the workers in it. That is set out in the Bill. We believe that those who invest their lives in industry are entitled to know much more about the prospects for the firms in which they work than has hitherto been the accepted practice. I recognise that the details need to be worked out with great care and I shall be entering into discussions on this matter with the CBI and TUC in the near future. I am hopeful that these provisions for greater disclosure will go a long way towards bringing about industrial democracy and better industrial relations.
The Bill ends with five supplementary clauses and four schedules dealing with various financial and administrative matters.

Mr. Dafydd Wigley: On Clause 21(2), concerning disclosure, will the Secretary of State indicate whether paragraphs (a) to (j) are exclusive or whether other information will also be required?

Mr. Benn: I should prefer to deal with that matter in Committee since the disclosure provisions are somewhat complex in character. In considering this Bill may I move the House to examine the magnitude of the problems that confront this country at this time? Britain, like all industrialised countries, is now threatened by the danger of a world recession. The oil price increases and the energy crisis have adversely affected the prospects for world trade. Inflation is world-wide, investment is sagging in many countries, and unemployment in the United States is high and growing.
Britain suffers from these problems along with other countries. Bur we entered this crisis weakened by years of

relative industrial decline as a great manufacturing nation. The numbers of our people engaged in manufacture have fallen and our imports of manufactured goods have risen sharply. Our investment record is poor compared with those of our principal competitors.
Since 1970 British manufacturing industry has been investing a mere 4p in every pound of our gross national income in new plant and equipment. The United States, Japan and France invest twice as much per worker as do we. Governments of both parties have worked hard to improve this investment rate, and policies of public subsidy and public intervention designed to correct it have been introduced.
When the Conservative Party was in power, public subsidies by means of grants, incentives and inducements of all kinds reached the level of £2 million a day. This was supplemented by the most elaborate system of direct controls over private industry ever imposed in peacetime.

Mr. Michael Heseltine: What proportion does that £2 million a day represent of the revenue in tax obtained from those same private companies?

Mr. Benn: The hon. Gentleman must not make assumptions. I shall deal with the question in my own way.
The level of subsidies to private industry by the previous Government was at the rate of £2 million a day. When the Conservative Party was in power it denied to the House of Commons the knowledge of the sums of money that were paid to individual companies. It was not until this Government came to power that we were ready and able to reveal to the House of Commons the names of the companies which had received these subsidies.

Mr. Churchill: The Secretary of State mentioned Britain's investment record compared with those of the United States, France, West Germany and Japan. Is it not strange that he should call in aid countries which are not burdened with the comparable level of corporate taxation as is Britain, or a comparable level of personal taxation? Those countries have a substantially lower proportion of State control of industry than


Britain, and are not faced with the pernicious legislation which the Secretary of State has put before the House today.

Mr. Benn: The hon. Gentleman should turn his mind to this question. When the Conservative Party was in power, and had the opportunity to make all these changes, there was a catastrophic fall in investment below the levels at which it was when the Labour Government left office in 1970.
Dealing with the measures taken by the previous Government, there were the Industry Act, the Pay Board, the Price Commission, the Industry Relations Act, providing investment checks, profit checks, and a direct attempt to control labour, coupled with company tax cuts and endless exhortations to invest, notably by the right hon. Member for Worcester (Mr. Walker), once the initial 1970 policy of non-intervention and disengagement, along with its main advocate, had been dropped from the Department of Indusdustry. That full panoply of central and bureaucratic control was actually accompanied by a further sharp fall in investment, and the whole policy finally collapsed under its own weight, lacking the consent that any industry policy requires for success.
I hope, therefore, that in criticising the Bill the Opposition do not fall into the trap of arguing that they are opposed to intervention. They even nationalised Rolls-Royce and Govan Shipbuilders as part of their strategy for a managed economy.

Mr Tom King: We should discuss these matters meaningfully. The right hon. Gentleman understands the position. He know the true record of the investment situation of this country. It took us two years to reverse the decline which had already set in in 1970, and by the time the Conservative Government left office investment was sharply rising. It is only since then that there has been a catastrophic decline.

Mr. Benn: Since the hon. Gentleman invites us to discuss these matters, over the last 30 years, under Governments of both parties, the country has failed to obtain the level of industrial investment it needs to be effective. This is a start-point for our debate.
The argument is not about a managed economy but about the much more important question, "In whose interests is it to be managed?" Is it to be intervention to prop up a system that has failed in a last effort to make it work, or is it to be intervention to release the wasted energies of our people by instituting long-overdue reforms in our industrial structure that offer real prospects of success because they meet the needs of those who create the nation's wealth? For many years we have been told that business has not had the confidence to invest and that, if only there were new laws, lower taxes, higher prices and profits, more moderate workers or a change of Government, that confidence would be restored and the investment would take place.
However, investment on the scale we needed never took place and we now know that it must take place if we are to put British industry back on its face—[Interruption.]—back on its feet.
Are we to define industrial confidence only in terms of the political prejudices of those who own industry, or are we to extend our definition of confidence by seeing British industry as being no less and no more than the British people at work? I have no doubt that it is the confidence of the whole nation that we must now seek.
We have come to the end of a chapter in our industrial history. The industrial system to which the Tory Party adheres—at least officially and in its manifestos—has failed us. I am not sure that any individual or groups of individuals can be personally blamed for what has happened. There are no villains and there are certainly no heroes in this story. We shall never make progress if we waste time looking for scapegoats or even for bogymen, or even supposing that it was all the fault of the right hon. Member for Sidcup (Mr. Heath).
It is no use blaming working people or the unions if they have to work in ancient factories with obsolete equipment producing old-fashioned goods at unecomonic prices and earning low wages as well. Working people not only are not responsible for the weakness of British manufacturing industry. They have hitherto been denied the tools and tackle that they needed to put it right.
Professional managers have suffered, too. They have also been denied the essential information they needed to learn, in time, what might be wrong with the firms for which they worked and how their performance could be improved, and they were shut out from the decisions that might have put it right.
I ask those hon. Members who carry on about disclosure to consider what might have been the benefits if the problems of British Leyland, Herbert, Fodens, and Ferranti had been disclosed to the workers in those firms and to the professional side of management early enough for them to be put right.
We have got to make a fresh start now. We have got to get investment up, and to get it up as soon as we can. If the market economy cannot or will not give us that investment, we must do it direct.
The prospects of a world recession are thought by many to be great. Everyone knows that lean years lie ahead. However, it is of critical importance that we in Britain use those years for re-equipment and emerge at the end with a manufacturing industry re-equipped and reconstructed to allow us to build on a securer basis for the future. We will not accept a return to the pre-war conditions of the wage cut and investment slump that destroyed our morale and undermined our strength at that time.
There is another reason for action. My hon. Friend who will be winding up the debate will deal with the regional aspects of our policy. I say this bluntly to the House, and especially to those members of all parties who represent areas of high and persistent unemployment in England, Scotland and Wales; successive Governments have developed policies designed to deal with these problems. There has been some success, but the hard core problem of unemployment remains.
I see no prospect whatever of reversing an even sharper downward trend in job opportunities in the development areas during this recession, where branch factories are so vulnerable, unless we have the power through the National Enterprise Board or the Scottish Development Agency or the Welsh Development Agency to act directly on the problems.
Nor do I see how we can prevent the Midlands, with its vital but often ill-equipped engineering industry, from enter

ing on a downward slide towards development area status, unless we are prepared to act directly on the investment gap and find some alternative to the industrial disputes that have troubled that indusry.
Even in the rich South-East, London Members are becoming concerned increasingly at the loss of manufacturing jobs. I make no apology for being concerned with jobs which are of central importance.

Mr. Gwynfor Evans: The right hon. Gentleman referred to Wales and Scotland. Is the House to understand that the powers of the NEB will be given to the Welsh Development Agency, and will that development authority be made accountable to the Welsh Assembly?

Mr. Benn: The hon. Gentleman is tempting me into an area of devolution which I am not briefed to answer correctly. The National Enterprise Board will operate throughout the United Kingdom, including Scotland and Wales, and will be to that extent working in parallel with the two development agencies in Scotland and Wales when they are set up.
It is no good talking about full employment if jobs cannot be maintained. Redeployment requires investment, and redundancy without redeployment simply lengthens the dole queues.
What are the arguments against the Bill? One is that there is to be too much intervention, that there is to be too much power for the Government and the Secretary of State at the expense of Parliament. That criticism is made by a party that transferred more power to the Commission in Brussels without any accountability whatsoever to the House of Commons.
I have heard the Bill described as a charter for workers' control. Both things cannot be true. It cannot be true that this is a Mussolini nightmare and a Trotskyite nightmare at one and the same time. We are seeking to get the relationship between Government, management and workers into a better balance.
Another criticism is that this is a Socialist measure. It is; and who is to argue that where public money goes in there should not be an equity stake and public accountability? Public sector investment—now 28 per cent.—was one


of the major sources of continuing confidence, even during the period of recession.
It is argued that the Bill destroys the mixed economy, but even the Planning Agreements, quite apart from public ownership, are designed for at most 100 to 150 firms out of hundreds of thousands. However, we do not accept the definition of a mixed economy that leaves the public sector permanently loss making by Government action and the private sector permanently profitable by public subsidy.

Mr. Eldon Griffiths: I am obliged to the Secretary of State for saying that he now envisages the Planning Agreements extending to 150 firms. He previously said 100. Will he name the 150 firms he has in mind?

Mr. Benn: I was just coming to the hon. Gentleman and I will deal with his question as I do so. It was his party that defined category 1 companies in the Counter-Inflation Act and the Pay and Price Codes. Aneurin Bevan used the more colourful phrase—"the commanding heights of the economy". It took the bureaucratic mind of the Tory Party to make them category 1 firms. We have never produced a list of Planning Agreement companies—

Mr. Griffiths: Where does the right hon. Gentleman get the figure of 150 from?

Mr. Benn: The category 1 firms to which reference was made in the policy of the Tory Party. In considering these Planning Agreements, we shall be entering into discussions with any firms that might propose Planning Agreements or where the Government might seek Planning Agreements. As the hon. Gentleman knows very well, the Planning Agreement system is a voluntary system.
For the Conservative Party no one has worked harder than the hon. Members for Henley (Mr. Heseltine) and Bury St. Edmunds (Mr. Griffiths) over the past year to distort the real meaning of this policy. They first invented the secret list of named companies for nationalisation. They had to drop that when it became clear that there was no secret

list. In fact, there never was. They knew that, and they had to drop that charge.
We have not heard one constructive proposal from the spokesmen of the Conservative Party since they left office nearly a year ago. They have busied themselves entirely with misrepresentation. I expect that we shall get more of it today. What is their policy? What would they do? With the publication of this Bill the country is entitled to ask how the Opposition see the task ahead. How would they boost investment? How would they win the co-operation of the nation? How would they cope with the depression in the regions and the problem of world trade? I doubt whether we shall hear any answers today if past form is anything to go by.
Negative opposition will not be enough as the reforms contained in the Bill become more widely known throughout the country. It is true that this is a powerful Bill, but its power is not the power of the members of the National Enterprise Board, the power of the Seccretary of State or the power of the Cabinet. It is the power of the ideas that have already gone into this policy which already excites the imagination of people who know that the nation can do better than it has been allowed to do so far.
The Conservative Party has nothing to offer, but the British people know that we need investment and that we must harness our skills and achieve co-operation and not the three-day week, if we are to produce more than ever from our old factories with their old equipment and extend industrial democracy. The British people will come increasingly to see the Bill as an instrument that they can use for themselves to put this country once again in the forefront of the world's industrial nations. Those are the powerful ideas that give the Bill the power that it will need to succeed. I have the great honour of begging the House to pass this measure.

5.2 p.m.

Mr. Michael Heseltine: I shall start where the Secretary of State ended and deal with the misrepresentations that he put before the House. The right hon. Gentleman raised a number of


points which I thought he could have explained at slightly greater length.
First, I shall deal with the £2 million a day which it is suggested is a subsidy to the private sector. That has to be seen as the payment to private companies in order to get them to do things that the politicians want them to undertake. It represents 25 per cent. of the total that the companies give the Government out of their taxes. In other words, £8 million in taxes goes into the Government from the private sector and £2 million goes back on our decision as politicians. If the House feels that anybody should be accountable for the spending of that money, the responsibility must be with us. If we misspend it, it is not the private companies which are responsible but ourselves. If we decide that we shall spend on Concorde £1,500 million, or our half of it, that is our decision and that is included as part of the £2 million a day. Let us have no more repetition being equated with truth, that being the right hon. Gentleman's stock in trade on all these matters.
Next, the right hon. Gentleman said that we had affronted the House by transferring power to the Commission in Brussels. That is no legitimate source of complaint. The previous Conservative Government succeeded whereas his Government failed. The then Labour Government tried to do precisely the same thing but the Conservative Government managed to negotiate successfully the signature of this country to the Treaty of Rome. I have not the slightest doubt that that is precisely what the right hon. Gentleman's Government will shortly be announcing—namely, that they intend to remain within it.
The third matter which the right hon. Gentleman dealt with was the decline in investment. My hon. Friend the Member for Bridgwater (Mr. King) accurately put the situation before the House. The House knows the figures. Investment declined in 1970 and 1971 because industrial confidence collapsed in 1969 and 1970. Industrial confidence collapsed as a direct consequence of the financial policies of the then Chancellor of the Exchequer. It is because Labour hon. Members do not understand the time lag between the decline of confidence and the fall in

capital investment that they see fit to repeat the same accusation.
The reality is that we rebuilt confidence in the early 1970s and that that threw up higher and rising levels of investment in 1972 and 1973. One reason for us having a relatively high rate of investment at this moment is because of the confidence that was built in 1972 and 1973. Perhaps Labour Members need not go on repeating what the House understands to be the total misrepresentation put forward by the Secretary of State.

The Under-Secretary of State for Industry (Mr. Michael Meacher): This is a point of some importance in view of the hon. Gentleman's pretence that he is correct in representing what my right hon. Friend said. Will he not acknowledge that, contrary to what he said, in 1968 manufacturing investments rose by 6½ per cent., that in 1969 it rose by 7 per cent. on the previous year and that in 1970 it rose by 8 per cent., whereas when the Conservative administration took office in 1971 it was minus 6½ per cent. and in 1972 it was minus 10 per cent.? The hon. Gentleman does not know what he is talking about.

Mr. Heseltine: I think it would have helped if the hon. Gentleman had listened. The figures that he has given bear out the argument I was deploying. He gave the figures for capital investment actually spent. Those figures always lag behind a decline in confidence. For that reason the hon. Gentleman misunderstands what is now happening. The present decline in confidence will destroy investment over the next two years. The Secretary of State's Department has already produced all the figures.
I now leave the points that were made inaccurately by the right hon. Gentleman. The House will remember that three years ago at this Dispatch Box the present Secretary of State for Industry took part in a debate on the Industry Bill 1972. He was speaking in Opposition. He said:
We believe that the arbitrary nature of the Bill is likely to strain relations between Government and industry given the massive range of powers which the Secretary of State has and the large sums involved."—[Official Report. 22nd May 1972; Vol. 837, c. 1031.]
That is what the right hon. Gentleman said when he opposed the Industry Bill


1972. He was speaking from the then Opposition Front Bench.
What did the legislation do which he described as likely to lead to a strain in the good relations between industry and Government? It gave £150 million for general aid to industry. Today he is taking powers for the National Enterprise Board to spend £700 million, and powers in his own name to direct the NEB specifically on how to spend that money. He is repealing most of the safeguards which were built into the 1972 Act to protect the private enterprise economy. He is taking powers to compel British industry to disclose forward plans and to make available information which will inevitably become public. That does not happen in any other country in the world.
What the right hon. Gentleman warned as likely to emerge from the Industry Act which the previous Conservative administration placed on the Statute Book—namely, a strained relationship—is as nothing compared with the consequences of the strain in the relationship which will emerge as a consequence of this Bill.
Last summer we saw the beginning of the attempt by the Prime Minister to suggest that the ideas that the right hon. Gentleman has rightly said lie behind the Bill would not be as radical, as purposive or Socialist as all of us have believed. In the middle of last summer the Prime Minister announced that the responsibility for drafting this Bill was to be removed from the Secretary of State and was to be placed under the personal command of the Prime Minister.
The next attempt to allay public anxiety was the appointment of the industrial adviser to the Government, the chairman-designate of the National Enterprise Board, not to work for the architect of the proposals or in the Department of Industry, but to answer direct to the Prime Minister in the Cabinet Office. Last Friday, according to Press reports, the Prime Minister, speaking on Merseyside, seemed to be converted to the curious constitutional view that the White Paper was to become the law and that the Bill would be subservient to what was said in the White Paper.
However, if we are not convinced by the idea that the White Paper is to be

the law, there are other reassurances for us. The Treasury will be there pitching to protect the taxpayers' funds against the ravages of the Secretary of State. If the Treasury fails, there is to be the hard-nosed Sir Don Ryder, who would have to be overruled before the Secretary of State was able to do what he wanted. But, for all the Prime Minister's assurances, the Bill is what the House is considering. The White Paper and the presence of Sir Don Ryder as chairman of the Board are in no way a barrier to the use of the powers in the Bill by the Secretary of State should he decide to use them.
The latest published evidence about the consequences of the Bill in its infant form from the Department and from the CBI shows that investment intentions and industrial confidence are gloomier than they have been at any other time since measurements of industrial confidence have been taken. It is no small wonder. From the date of the publication of the policy documents in 1973, it has been clear that the Left-wing architects of the Bill have been determined—[HON. MEMBERS: "Oh."] I am delighted that my words should have brought such a welcome chorus from hon. Members opposite. It does not take long to identify where they sit.
The purpose of the Bill was to achieve three principal functions for the National Enterprise Board and the Government. First, there was the unfettered freedom to nationalise individual companies. Secondly, there was power to direct those companies to obey the political will of the Government. Thirdly, there were the compulsory powers to force companies into Planning Agreements. The Secretary of State suggests that the powers are voluntary. We shall see when we reach the appropriate stage of the Bill. The Bill achieves all three objectives which have been persistently sought by the Secretary of State and his Left-wing colleagues. The Bill has emerged with the maximum powers for the Secretary of State and the minimum of parliamentary scrutiny.
Let us consider the Secretary of State's powers in the Bill. He has absolute power to appoint the National Enterprise Board. He has power to direct the Board to use the provisions contained in Sections 7 and 8 of the Industry Act


1972, and the Board will have no right of appeal against him if he should issue a directive. The right hon. Gentleman has the right to determine the financial objectives of the Board. He has power to give specific directions to the Board which it cannot resist. He has power to force companies to disclose information to the Government and to unions on a scale unequalled in the world.
I do not suggest that there is not reference on occasion in the Bill to the Treasury. The Secretary of State must consult the Treasury before he fixes the financial objectives of the Board. But the terms within which he fixes them are so vague—simply to show an adequate rate of return as calculated in advance—as to be totally meaningless.
The power of the Secretary of State is widened, as the right hon. Gentleman has pointed out, by the repeal of the limitations in the Industry Act 1972. The limitation of 50 per cent. of a company's equity which could be taken under Section 8 has gone. The restriction to use the powers only in the last resort has gone. The provision that all the powers should come up for review at the end of 1977 so that Parliament could see whether there had been worthwhile use of taxpayers' money has gone.
There has not been one economic justification, not one industrial rationalisation, to explain why the safeguards built into the 1972 legislation should be swept aside on the assumption, apparently, that they had failed.
Even the limited parliamentary control once promised by the Secretary of State for Industry before companies were nationalised has gone. I quote from the working document which the right hon. Gentleman produced shortly after he took office:
The Industry Act will provide us with powers to extend public ownership by the acquisition of individual companies through a full parliamentary process.
I defy the Secretary of State to show what "full parliamentary process" any company acquired by the National Enterprise Board, under his directive or not, must go through. The reality is that there is no parliamentary process. This is one of the most serious extensions of power in the Bill. It is a total reversal of the argument that there would be

parliamentary control on the use of the powers.
The National Enterprise Board is empowered to bid for any company. When hon. Members opposite have been campaigning throughout the country saying that there would have to be acquisition by agreement, the impression has always been left that there would be friendly negotiation after which, if everybody was reconciled to the company going into the hands of the State, agreement would be reached. But that is not the situation. The Board, with or without the direction of the Secretary of State, has the power to make aggressive takeover bids for any company it requires. The one parliamentary safeguard against it is that it cannot acquire more than 30 per cent. of the equity or spend more than £10 million without the Secretary of State's approval. I wonder how many hon. Members think that there would be any difficulty in obtaining that approval.
The more one looks at the powers in the legislation, the more obvious it is that the more serious the powers the less the parliamentary control, and the more trivial the powers the greater the parliamentary control. For example, there must be absolute parliamentary agreement before the £700 million is raised to £1,000 million. But the £700 million will be spent without parliamentary control. The Secretary of State will tell us when he considers that a company is an important manufacturing company. However, he has already told us that the Table A companies are those companies. But he must lay that information in an order before the House—as though he is giving information about which we do not know already.
The Treasury is then brought in to deal with a secondary range of relatively minor powers which set the totally undefined target for the National Enterprise Board. The Treasury must be consulted when the Secretary of State wishes to extend the guarantee limit on shipbuilding loans. If the right hon. Gentleman wishes to give help with interest payments to people owed money under the shipbuilding Act, the Treasury must be consulted. If he goes as far as to raise the ceiling below which ministerial approval for NRDC projects is not required, the


Treasury must be consulted. No one can doubt that there will be plenty of work for the Treasury under the Bill, but it is not in areas where it has relevance to parliamentary control or scrutiny.
The powers where the Secretary of State stands alone are totally different. He has power to direct the Board to buy any company; power to exempt the Board from the statutory restriction on what it can buy and the money it can spend; power to order companies to disclose to him and the unions all details of their business over an unlimited period. In his working document the Secretary of State says that it will be a three-year period. He has power to direct, without any appeal, the Board in the use of the powers given to him in the Industry Act.
However the Secretary of State may put the case, there is no doubt that parliamentary accountability has been one of the principal and earliest victims of the Bill and it will be the task of my hon. Friends and myself in Committee greatly to strengthen Parliament's opportunity to scrutinise the legislation.
The Secretary of State has been asked about parliamentary accountability. For those of my hon. Friends who did not see the "Panorama" programme I shall quote what the right hon. Gentleman said about the use of the powers under the Bill. The transcript reads:
DIMBLEBY: … But according to this Bill, you will have power to direct the National Enterprise Board how they spend £700 million without actually going back to Parliament.
BENN: Ah yes but then you see …
DIMBLEBY: It's an awful lot of money isn't it?
BENN: Well, I know, but then a Minister with power of that kind accountable for how he exercise it … accountable on a daily basis, more accountable than if I didn't have the power.
How will the House know about any directives the right hon. Gentleman gives to the NEB? We shall find out some 18 months later when the Board's annual report is published. There is no parliamentary accountability, and faced with that sort of situation I would rather settle for the Kirkby precedent. Let us have the stuff published when the House has gone home for Christmas, because at least we get it within a fortnight.
Moving to the next aspect of the Bill, I agree that the rationale of the legislation is the need for investment.

Mr. Benn: Before the hon. Member moves on, will he deal with the point I made? Every year that the hon. Member was a Minister £700 million was given to private industry and he concealed from Parliament the names of the firms that received it. It took this Government to make public the names of the firms that had received Government money.

Mr. Heseltine: That is a marvellous argument to illustrate the degree of confidentiality that industry can expect from the right hon. Gentleman when the Bill becomes law. As he knows, he has not published this information. I stand to be corrected, but as far as I know there is no information available listing, company by company, the £700 million of grants to private firms. There is a list concerning 20 companies. It was published not because the right hon. Gentleman wanted anybody to have the information for genuine reasons, but simply to damage the credibility of the free enterprise system.

Mr. Neville Sandelson: Is the hon. Member saying that where there is such a vast outlay of public funds information should not be given to the public about where the money has gone?

Mr. Heseltine: The hon. Member has completely missed the point. There is a degree of accountability for spending this money, as there should be, and it is for Parliament to take the decisions to spend it. If we decide to spend it on regional aid, the RB 211, Concorde or shipbuilding grants, that is all very well, but let us account for it. Do not let us expect industry, under the sort of propaganda the Secretary of State was conducting, to carry the rap for the policies formulated in this House.

The Minister of State, Department of Industry (Mr. Eric Heffer): Is the hon. Member asking the Government to publish every detail of every loan and grant made to every company? If that were done industry would lose confidence for that reason more than for any other.

Mr. Heseltine: The hon. Member should have listened more carefully. It


was his right hon. Friend the Secretary of State who said that he had published all this information, and I made clear that he had not—

Mr. Heffer: No.

Mr. Heseltine: The Minister of State should not keep interrupting. We shall have a lengthy Committee stage and we shall give him all the time he requires when we get to it.
Perhaps I may now deal with the NEB. The Secretary of State for Industry approached the matter by arguing that industry had failed to invest and that therefore the Government must invest for it. We totally and utterly reject this approach to industrial investment. We believe that the most effective investment comes where Governments create the atmosphere in which investment is attractive and in which industry, in partnership with Government, is given every incentive to carry out investment in those conditions.
I agree with the Secretary of State about the failure of investment over the last two decades, but it is not a failure of industry but of the political system and of Governments to bring about the climate of partnership which has been created between industry and Government in the rest of the capitalist world. The failure was because our management of the economy has constantly subjected industry to a stop-go situation, because Government and politicians were totally obsessed with the concept of nationalisation on the one hand or total abstinence on the other, because they failed to understand what was happening across the world and because they totally misunderstood and never worked out the sophisticated mechanism which might have led to the renewal of confidence we all want.
If the right hon. Gentleman is trying to find out why we have not got the scale of investment we need, I can tell him it is because the ratio of profit to GDP has fallen, because free cash for disposal after all costs and tax has been dramatically reduced for the private company and because industry has been forced to operate in an atmosphere of sharp lurches from expansion to contraction and back again. The position is worse than it has ever been and consequences of the social

contract with its rapidly rising wages will do more to destroy investment over the next decade than anything any benefits from this Bill will do to encourage it.

Mrs. Audrey Wise: The hon. Member constantly refers to industry. Does his definition of industry include the workers? What contribution did his Government make to ensuring that the workers had confidence?

Mr. Heseltine: I can give the hon. Member the assurance she wants, but of course my workers include everybody in a company, not just those who belong to trade unions.
Circumstances today are worse than they have ever been, and in these prevailing economic conditions the Government's policy of highly selective investment in industry will mean that the weakest will come to collect the cash and the strongest will be gradually debilitated. We shall therefore have a situation of selective industrial support in which the strength of British industry is continually debilitated and there is a failure to back the successes of the economy without which there is no long-term future for British industry. It is always the weakest companies that come first, even if they have had Government help in the past. Take, for example, some of the companies that the IRC supported—British Leyland and Alfred Herbert. They were helped by the Government, but three to four years later they were back again because their fundamental problems had never been faced or tackled.
The remedies are clear. We have to establish a new basis for explaining the nature of profitability in a capitalist economy, and we have to pursue policies that give industry the opportunity to retain sufficient of its cash so that it can then respond to market forces at home and overseas and invest in a way in which industry would then be capable of achieving. Too many of us in this House have failed to see the need for that over far too long a period.
I can give one big example of the worst sort of Government intervention where the Government own the industry. It concerns the steel review announced by the right hon. Gentleman recently. What is the consequence of that review? The right hon. Gentleman has delayed the


long-term investment strategy of the British Steel Corporation for 12 months. He claims that he has saved 13,500 jobs. In fact he has only delayed the loss of them for two to four years. We do not know what cash will be needed to finance the review, and there has been no attempt to spell out the implications of the review for the economy. He has provided an additional two to four years of uncertainty for 13,500 workers after which they will find that the Government can no longer support them. He has failed to give the necessary degree of impetus to retraining, re-employing and rehousing which would have been a much better way of investing the money.
In addition, he has done much worse. The Government have shown every British worker whose employment depends on the sale of products which use steel from the BSC that for a long time the BSC's capability to provide good quality steel at an effective price is prejudiced. The whole of Britain's manufacturing capability, with all the jobs at stake, is being deliberately undermined by the strategy of holding up the investment programme of the British Steel Corporation. Nationalisation has all too often turned out to be a deceit, and a confidence trick on the British people.

Dr. Jeremy Bray: Is the hon. Member not aware that many of the works that are scheduled for closure in the British Steel Corporation have been making a profit, and that the complaint of industry is that it has not been able to get enough steel? This state of affairs is likely to continue. Many people in BSC feel that the delay in the closure programme is needed.

Mr. Heseltine: Let us go back over the history. What did we do in this country to the steel industry? We nationalised it, denationalised it and renationalised it. We subjected it to every sort of political interference. Then we wonder why we have not got the steel. The failure of British industry is in this House and the inability of the politicians to see the real need to build investment over the past 20 years. That is why the British Steel Corporation cannot provide steel. If we had done what the Europeans did, which was to back the private sector of their steel industry and expand it, we would

not have had half the problems that we have had with our steel industry.

Mr. Michael Marshall: Does my hon. Friend agree that it is because of the recent delay during the closure review that the cost of the £3,000 million investment programme has risen to £4,500 million? Is that not a typical example of how planning delay will lead us down a slippery slope?

Mr. Heseltine: My hon. Friend is right. That is an example of the unrevealed costs which have been incurred simply to play to the populist ambitions of one Labour politician. It is all very well for Sir Don Ryder, talking to the Investor's Chronicle, to say that his aim for the NEB is
to see this as a totally commercial animal, not some big Santa Claus … I have no intention of participating in something that is just a home for lame ducks.
Before making such remarks, he ought to speak to some of the chairman of the nationalised industries and learn what public interference and political pressure are all about. All Governments and all Ministers have interfered with the nationalised industry, and the price that is being paid is incalculable.
I come next to the concept of the Planning Agreement. First, I shall say what we are not talking about. There is no question of any Conservative Members suggesting that information should not be made available to employees in companies, though not necessarily to trade unions, who represent some of the employees. The best companies do it on an ever-increasing scale. As we made clear in our manifesto at the last election, we would have moved forward purposefully to achieve greater progress in this important matter.
We are not talking about disclosure of information or a desire to involve work people in the companies for which they work. That is not the issue. What we are talking about is the disclosure of information which adds up to the corporate plans of British manufacturing industry. The reason we are against it is that it is based upon a fundamental misunderstanding of what a corporate plan is all about. We know, and Labour Members who have industrial experience also know, that corporate plans are essentially vague extensions of an understanding of what the possibilities might be.
It is right intellectually that companies should indulge in corporate planning, look forward and work out what the options are likely to be. But nobody in industry would put a corporate plan on a piece of paper and say, "That is what will emerge". Nobody would do that, but Governments will, and trade unions will. That is where the trouble will start. That is why we are fundamentally opposed to the whole approach of revealing information on this basis.
The question was always seen against the background of corporate plans being voluntary. Let us go back to the same "Panorama" programme and see how voluntary the intentions behind some of the thinking on these plans happen to be. Mr. Dimbleby by this time was talking to Mr. Don Groves, who is the regional organiser of Mr. Jenkin's union, ASTMS, in the Midlands.
DIMBLEBY: The system of planning agreements is meant to be entirely voluntary, is that your understanding? Do you think this system can be put into effect on a voluntary basis?
GROVES: Well, its like any negotiations, isn't it? It's voluntary. I've never yet met an employer that wants to volunteer to bargain decent salaries, or decent conditions, it's a matter of gently persuading them in the usual traditional way, put their arm up their back and when they yell out you sit down and negotiate with them, and planning agreements will, in fact, occur in exactly the same way.
This is described as the regeneration of British industry. Perhaps Mr. Groves had a more accurate summary of what was going on when in reply to an earlier question he said:
much more important the employers aren't aware yet of the impact of planning agreement … it's a completely new development … and this development as far as I know hasn't been tried in any other country outside of the Socialist bloc.
That is the practical approach of a person—

Mr. Benn: Would the hon. Gentleman care to comment on the situation that now confronts the workers in, for example, the Imperial Typewriter factories at Hull and Leicester, the Honeywell factory in Lanarkshire, the Singer Sewing Machine companies in West Central Scotland, and in many other factories who wake up and find that their jobs have been taken away from them, not by their arms being put behind their backs and twisted, but by their being sacked without notice, without prior disclosure

of the plans to those most directly concerned?

Mr. Heseltine: I imagine that they feel much like the 40,000 people laid off by the British Steel Corporation in the past five years or the 200,000 laid off by the National Coal Board. Much of that happened under the last Labour Government. There is no question but that we must improve on this matter. No one disputes that. But that is not what the Bill is dealing with. We are dealing with long-term plans which would have serious ill-effects on the jobs and the security of the very people the Secretary of State is trying to protect.
The deal was to be a quid pro quo. Industry was to have a Planning Agreement with the Government and the basis of that agreement was that the Government would give to industry certain information. That is what the right hon. Gentleman said in his speech today. Certain information would be handed to industry and certain grants would also be made available on a permanent basis. In exchange, industry would hand to the Government a great deal of information, so that the Government could then build their plans on that information.
It is interesting to see that in Clause 14 the grants to be handed over are clearly spelled out, as the right hon. Gentleman rightly said. But on page vii of the Explanatory Memorandum to the Bill we find that it is the Government's intention that the grants will not be reduced in any case. Therefore, I cannot see what benefit there is to industry in that bribe.
The second question is what information industry will receive from the Government that would help it with its job. There are several questions on this. Will only companies which enter into Planning Agreements receive that information? If so, how are the big companies which do not enter into Planning Agreements to be able to compete with those that have? They will not have the same information. Will that be used as a threat of a special advantage to companies, thereby prejudicing those that do not enter into Planning Agreements and compelling them to do so? If the argument is that all the big companies will have entered into the agreements, what about the small and medium companies which are excluded altogether? How will they compete with


the big companies which are given privileged information? Those questions must be answered.
Many Opposition Members wonder just what information the Government have that will be handed over to private industry to make it that much more efficient. What is it that the Government know which, if given to industry, would make it eaiser for industry to trade profitably or invest successfully? We hear not a word from the right hon. Gentleman. If the finance director of a large company had asked for guidance from the Chancellor of the Exchequer last October and had been told to budget forward at 8½ per cent. inflation, his company would be bust today. If he read the Labour Party manifesto saying that inflation would be down to 10 per cent. at the end of this year, he would also be bust today. If he went to the Chancellor of the Exchequer to discuss his cash flow problems, he would be talking to the man who succeeded in taking £1,000 million from industry in one Budget, only to be forced to give it back six months later because he got his sums wrong. He would also be talking to the man who had to come to the House a few weeks ago to explain that his borrowing calculations were £2,000 million out in six months.
This is the basis of the information upon which the Government say that they have a contribution to make to the private sector. It is a total and absolute delusion. I should have thought that what lies behind the reality of the situation is contained in a speech by Richard Marsh. He ought to know. He has experience on both sides in this House and industry. As the chairman of a nationalised industry he has worked with Ministers in both Governments. On the way that the Government deal with the nationalised industries and the disclosure of information he says:
None of the five-year investment plans we have produced has remained intact for more than six months because of the inability and unwillingness of Government to settle investment plans for more than an inadequate period ahead. The cost to the taxpayer of the present short-term nature of the Government's … method of allocating investment to the nationalised industries is frightening.
That is somebody who knows.
Why does not the Secretary of State for Industry and the Government put the

nationalised industries through the Planning Agreement process and make it work so that we can all see what the arguments and advantages are?
To show the fatuity of the whole thing, the Bill provides for 250 people to monitor the whole of British industry, including clerks, messengers, bottle washers and the corporate planners. It is suggested that 250 people will do the whole thing. ICI alone has 250 doing that kind of work. The Secretary of State thinks that he will monitor the whole of British industry in this way. The right hon. Gentleman has a staff of 10,000 now and yet he cannot answer a simple factual question when asked for information in this House.
We know what will happen. Information handed to the Minister will assume a significance and a validity which no corporate planner would ever give to information of that kind. The first Minister will build on the information assumptions which it does not warrant. He will make claims in the heat of a by-election or meet the need during a General Election for a survey of intentions. The first Minister will have a bonanza with the great regional development plans about which he has been told over two, three and four year periods hence. He will then go, because the plans will not work out in the way he promised. What will his successor say? He will say, "I will not be caught in that way. I will make sure that I have a double or triple check. I want more information and details earlier." So the bureaucracy, which always feeds on itself, will multiply as more intrusions are made into the private sector of the British industry.
Let us look at some of the areas where the disclosure of information will have a harmful effect. The right hon. Gentleman said that there would be confidentiality. How can he tell this House that he believes in confidentiality when he is the Minister who, in dealing with Sir Arnold Hall, the chairman of Hawker Siddeley, published the whole of his side of correspondence about the HS146 without ringing Sir Arnold Hall to find out whether he had any objection to it? How can the right hon. Gentleman, who has seen his civil servants' recommendation about Kirkby leaked to the Press—I do not know where from—tell us that the secrets of British industry will be safe


in his Department? The right hon. Gentleman will be playing with the forward investment programmes of a significant area of British industry upon which the jobs of Britain's working people depend. The House had better understand the dangers.
I will point to some of the more precise and technical difficulties. If the right hon. Gentleman were in Opposition we would hear emotive words of insider dealing. Let us consider the problems of the Government and the unions being given this information. In my view, it would put them in an impossible position. We hear talk of confidentiality. Let us consider a situation where the National Enterprise Board is preparing to buy into a manufacturing processing company, reaches agreement, thinks that it is a very good deal from both points of view, and therefore puts forward its recommendations to the Treasury and the Department of Industry. Then, when it is about to be signed and approved by the Government, somebody says, "We have a Corporate Plan from one of the company's competitors showing that it is is about to invest £10 million in a competitive process which will destroy the validity of that company". According to what we are told, the Government would not tell the National Enterprise Board. Therefore, how they ever sustain a charge from the Public Accounts Committee that they had let the National Enterprise Board go ahead with investment which they knew would turn out to be a complete waste of money?
What does the trade union leader, given a Corporate Plan about a particular company, do if it looks bad and gloomy and he happens to be a trustee for the pension fund of his union which owns a lot of shares? Is he allowed to sell them? If he does not sell them, he will be held to criticism by his members for not doing so.
How will we deal with that kind of situation if all these plans are made available? [AN HON. MEMBER: "It was in the IR Bill."] There was nothing like this in the IR Bill. I have it here and will read from it, if necessary.
Let us look at the effect on employment of companies which have investment to make in this country or elsewhere in Europe because they want a

base within the Common Market. Will they come here? Will they invest in this country? Will they invest in partnership schemes in Europe with British companies knowing that they have the choice between a non-British and a British partner, one of which carries with it total disclosure and the other total confidentiality? Is that the kind of risk to which hon. Gentlemen are seriously suggesting employment prospects should be subjected?
The reality is that trade union leaders are placed in an impossible position. It is interesting that the unions are to get the information, not the employees. I sympathise with the right hon. Gentleman because I know that he is trying hard to get the information given to employees, not to the unions. One has to praise him for trying and to sympathise with him for losing the only battle that he lost on the Bill.
What will happen to the ambitious trade union member who sees his responsible leader accept a Corporate Plan which allows a degree of profitability to a particular company? At the next union election he will say, "Lads, back me and I will get more of that profit for you." Elections to unions will be fought on the amount that can be extracted from projected profits of the Corporate Plans three years ahead. That will lead to the further diminution of profitability in British industry and a further reduction of investment opportunities in this country. So it will go on.
We shall go into more detail in Committee of the endless numbers of examples of this kind which will bring about a cataclysmic decline in the possibilities of success for the British free enterprise system. Against the background of the economic policies of this Government that is gravely weakening the morale and confidence of British industry, with the worsening prospect every day of investment in industry and the certainty of rising unemployment.
There could not be a worse moment at which to introduce the Bill. It would be a bad bill to be introduced at any moment. It is a weary combination of old-fashioned nationalisation and a damaging erosion of privacy within which every Government and every company


must, to an extent, operate. It will destroy, not create, jobs. It will divide management and unions, not bring them together. It is mischievous, and deliberately so. I tell the House, on behalf of the Conservative Party, that we shall repeal this Bill.

5.49 p.m.

Mr. Roy Hughes: Having listened carefully to the hon. Member for Henley (Mr. Heseltine), it is clear to me that the Opposition have little constructive criticism to offer to this debate. I welcome the Bill as an attempt at what has been described as the regeneration of British industry. Most of us know that it is long overdue.
Essentially, this is a mild measure building on the 1972 Act that was put through this House by the previous Government. The Secretary of State has been subjected to the usual hysterical attacks from big business and the Conservative Party. In my view, they are a fair indication that my right hon. Friend is progressing on the right lines.
We know all about the huffing and puffing from the hon. Member for Henley and from his colleague the hon. Member for Bury St. Edmunds (Mr. Griffiths), but essentially they are fighting a sham fight. Their strategy is to make a fuss about a measure like this in order to try to deter our Labour Government from introducing even tougher measures.
If my argument that this is essentially a mild measure needs bearing out, I notice that even the Welsh CBI is singing muted songs of praise about the Bill, and the Welsh CBI is not exactly the most progressive of bodies. On the other hand, if capitalism had been so successful, my right hon. Friend would have had to use vastly different arguments. However, the fact is that the capitalists have let down Britain by their failure to invest. This great defect has to be remedied to give British work people more power to their elbows so that we as a country can compete in the markets of the world.
Clause 1 of the Bill establishes the National Enterprise Board, and Clause 2 sets out its functions for the promotion of industrial efficiency and international competitiveness. Success here could be of immense benefit to the country.
Then the Bill speaks about the maintenance and safeguarding of employment. The key priority here lies in getting the support of work people, because naturally they are concerned above all else about the security of their jobs. We know all the difficulties in Wales, in the north of England and in Scotland over the years.
I refer in passing to the problem of Northern Ireland. The fact is that there is already a Finance Corporation operating in Northern Ireland. It might be described as a forerunner of the National Enterprise Board. But, in view of the effectiveness of that body, I hope that we may expect the support of the Irish Unionist Members in the Division Lobby.
A further function of the board is to help firms which are in difficulties, broadening and extending the interventionist policies contained in the 1972 Act which, as I say, was brought forward by the previous Conservative Government. It could be described as propping up capitalism. Big business and the Conservative Party have no objection to Government aid for industry. They are concerned about the possible change in the old structure of ownership and decision making in industry. They will try in any way that they can to hide the failure of their own stewardship. They will blame the work people. They will blame the trade unions. Anything can be sacrificed. No slander is too malicious to maintain their essential control. In a mild way, this is now being challenged.
Clause 7 specifies an overall borrowing limit of £700 million. With the consent of the Treasury, that limit could be raised to £1,000 million. I question whether that is enough, especially bearing in mind the statement a few days ago by Lord Stokes that British Leyland alone needed £200 million immediately, as he put it, "just to stand still". Vast sums are needed if the economy of the United Kingdom is to expand and if our living standards are to improve.
Clause 2(2)(c) speaks of an extension of public ownership into profitable areas of manufacturing. I wonder what that means in practice. The amounts quoted are not enough to buy out major concerns such as ICI. Is this merely buying part of the shareholding in different concerns? This is what the late Hugh Gaitskell advocated nearly 20 years ago, for which he was so severely criticised by the


British Left at the time. However, I agree that if there is to be public money invested in this way, likewise there should be public accountability.
We need to get away from the Morrisonian concept of public ownership. The Secretary of State already has the British Steel Corporation under his control. The corporation has 1,500 headquarters staff planning how to make other people redundant. The hon. Member for Henley referred to the BSC and said that he felt that it should have more freedom. In Newport, I have had a fair amount of experience of the BSC. Frankly, I have not much confidence in it. It closed our tube works with the loss of nearly 1,500 jobs. Now there is a shortage of the product. The work people argued at the time that what was needed was not closure but capital invested in the works.
When we talk of public ownership through this Bill and the National Enterprise Board or the existing nationalised industries, I feel that certain criteria have to be accepted. First, there is accountability. The National Enterprise Board is closely allied to the Government. The Secretary of State needs to tell us more about its accountability to Parliament. To an extent, I agree with the hon. Member for Henley, but I am sure that it is for vastly different reasons. Organisations like the BSC resent very much the implications of political control, but, whenever this has been raised on previous occasions I have not noticed the hon. Member for Henley being so keen on the BSC coming under the direct control of the House of Commons. The BSC is keen for Britain to stay in the Common Market. That is yet another indication that it wants to get away from political control.
It raises also the question asked earlier in the debate by my hon. Friend the Member for Tottenham (Mr. Atkinson), who wanted to know from the Secretary of State how far the Common Market would affect the functions of the National Enterprise Board, provided that we stayed in—which Heaven forbid. From the reply of my right hon. Friend about Articles 92 to 94 of the Treaty of Rome, it seems that changes will be needed in the treaty rules. I am sure that my right hon. Friend the Foreign and Commonwealth Secretary will be taking this matter into

consideration, because the Brussels Commission refuses to allow major changes in the structure of industry without its prior approval. The Brussels Commission could veto the Board's function and ensure through the court that it did not aid the industries in the manner which the Bill suggests.
The question of interference by the Common Market is vital because that organisation is already interfering so much in our affairs. Public enterprise concerns should appoint managers who believe in public enterprise. They should not appoint people who are anxious to sell public enterprise back to private enterprise. We have seen examples of this recently.
In publicly-owned enterprises there should be a major extension of industrial democracy, bringing work people into the decision-making process, giving them a say in the enterprises in which they invest the whole of their working lives. Work-people should be informed of their rights under the Bill when it becomes law. Plainly written leaflets should be issued giving them an explanation of their rights. This, in turn, puts new responsibilities on the trade union movement.
I welcome this Bill. The question still arises whether its provisions are tough enough. We must bear in mind the huge problems that exist in industry and the years of neglect that have gone by.

6.2 p.m.

Mr. Richard Wainwright: It would be wrong not to acknowledge that on this occasion the Government have attempted to provide the House with some sort of framework within which the inevitably massive assistance to industrial investment is to be provided. This is something which the House and the country entirely lacked during the régime of the Conservative Government. In spite of a speech or super-Gladstonian length from the hon. Member for Henley (Mr. Heseltine) it was notable that there were no signs of positive Conservative thinking about the framework within which this unavoidably massive investment is to be provided. But the framework in this Bill is so frail that it can be pushed into almost any shape which may suit any Government from time to time. We have all read advertisements for gadgets for the home


which are so flexible and adaptable that they will fit either the smallest semi or the largest mansion—telescopic, collapsible and infinitely suited to almost any range of uses. That is the characteristic of the framework in this Bill. As a result, the Government are left largely free to do what they please.
We on the Liberal benches fear most—[HON. MEMBERS: "Where are they?"] Hon. Members should have no fear, Liberal reinforcements always arrive and hon. Members should have noticed that the bons mots in Liberal speeches are always reserved for the later part of the oration.
The danger is, not that the country will have some fearful Soviet inflicted upon it or that the corporate State will dawn next year under the leadership of the Secretary of State; it is a much more dreary and unattractive one, namely, that the largest farmyard of lame ducks ever known will be under the presidency of the NEB although not under the leadership of Sir Don Ryder, necessarily. I predict that his life in that post will be a short one, because a man of such tremendous commercial acumen and determination is not likely to wish to remain long surrounded by the wreckage of once-great industries.
Those industries will also be notably vulnerable to the terrible dangers of political and social pressure; they will be massively labour-intensive, in which there will be appalling resistance when the inevitable lay-offs and redundancies are rightly suggested. Liberals are aghast because, during the whole of the discussion of this Bill, and in the Minister's speech this afternoon, there has been no positive mention of retraining. Yet this is probably one of the main elements to which this country must look for industrial salvation.
Furthermore, there is no substructure on which a Bill like this can hope to operate successfully. There is no substructure of works councils or other democratically-composed workers' organisations which could be entrusted with the otherwise admirable provisions for disclosure. As a result, disclosure is to be made, quite unsuitably in our opinion, to union representatives who may have no loyalty whatever to the plant con

cerned. There is also no structure for parliamentary control, partly because the outgoing Conservative administration left no legacy of parliamentary control whatever in this field. It was up to the Government to provide one when they first took office almost a year ago. This is important, because the key factor for a body which is to intervene to prevent great industries decaying is the ability to spot the symptoms of decline at the earliest stage. In this country there is no mechanism for doing that.
In 25 years of practice in an international firm of chartered accountants one of the few things I learnt was that only people on the very inside of such concerns can spot the first signs of decay. The tree appears to be in magnificent leaf, the branches are still growing and the fruit is appearing, but those on the inside know that management, research, salesmanship or market development—perhaps all of them—are beginning to fall off and that decline is setting in. Where, in the whole of this imposing structure, is there any arrangement for detecting these things early, before the duck becomes acutely lame?
In an effort to inject a constructive approach into this debate, even at a fairly late stage, I make this suggestion. The State is overwhelmingly the biggest buyer of manufactured goods in this country. Intelligent buyers soon spot when the supplier is going to seed. I hope that there will be some provision for State purchasers to report to the right hon. Gentleman when they detect that even famous names are beginning to offer an inferior service. Far more could also be done by commercial attaches abroad to report the gossip of the market place in their respective capitals, when they hear that great British exporters are beginning to lose their cutting edge.

Mr. Eldon Griffiths: I am intrigued by the suggestion of commercial attaches listening to the gossip of the market place and then reporting back to the Secretary of State. What happens when one of the Government purchasers or a commercial attaché finds that one of our nationalised industries is falling down on the job? There is the case of a gentleman from the Coal Board who reported that the board wrongly spent £2 million. He was sacked.


What happens when the report concerns public and not merely private industry?

Mr. Wainwright: There is no problem here. It was implicit in what I said that reports which are critical of the nationalised industries should be acted on. I am aware of the example which the hon. Member cited, since it centred round Doncaster, in Yorkshire. It is entirely inapposite. I do not want to be led astray, Mr. Deputy Speaker, because you will be the first to rebuke me afterwards. The example is inapposite because Mr. Grimshawe, the gentleman in question, was not an independent Government servant like a commercial attaché or a purchaser. He was simply an employee of a nationalised extractive industry. Furthermore, the duties of auditors could be extended when some Government gets down to a long overdue new Companies Act. For example, auditors share some responsibility in approving or otherwise every word in a chairman's statement, since some statements tend to give confidence that a concern is still fully alive when morbidity has set in.
The people who, above all, are in the best position to witness the first signs of the onset of industrial decay, are the workers. They are the people who see the managing director's efforts slackening off. They are the ones who notice when the boss's car is being driven off in the direction of the golf course. They are the people who know that the components are no longer arriving at the moment when they are required. They are the people who notice if more time is being spent in wining and dining than in selling the product. Therefore a structure where those working in a concern can monitor the directors' performance—and, indeed, can have a vote at the meeting which appoints directors—is long overdue.

Mr. John Davies: Is the hon. Gentleman speaking about professional activities, or an industrial concern? If he is speaking of an industrial concern, it is certainly one I do not recognise.

Mr. Wainwright: I am speaking of industries of which, over a period of 25 years, I have accumulated some modest knowledge.

Mr. Davies: In what capacity?

Mr. Wainwright: In addition to lack of provision in the Bill in this respect we on the Liberal bench are concerned lest the NEB, having providing Labour Members with some political glory and ammunition, be overwhelmed in its early years by too great a task.
It was disappointing that the Secretary of State for Industry did not get round to saying which of the existing Government shareholdings would be taken on board by the NEB. Assuming they all are, we would say that Rolls-Royce, ICL, the subsidiary of George Kent, parts of the motor-cycle industry, British Leyland, Foden and Ferranti are enough for a start, without spending another £700 million in the early stages on further acquisitions.
A question which has already been touched upon is that of parliamentary control. Surely by now Labour Members should have learned from the experience of their earlier creation of the IRC—but obviously they have not done so. No less an authority than the present Paymaster-General, writing in 1973, when in opposition, said, in his book, "Political Responsibility and Industry",
To whom, and in what respects, was the IRC responsible? The Government found that, like Frankenstein, it had little control over its monster.
Going a little further than that, a young Fabian, Donald Roy, writing in a Fabian pamphlet only last September, said this of the NEB proposal:
This would involve a transfer of sovereignty from Parliament more significant than either entry into the EEC or the setting up of the Pay Board and the Price Commission.
In dealing with this point I do not want to raise Committee points, but I shall mention one by way of illustration. The measure contains all manner of subtle clauses designed to truncate the usual procedure of affirmative resolution in this House and to deprive both Houses of Parliament of the usual rights which traditionally they have in respect of that procedure.
In the opinion of the Liberal Party, this Bill cannot work until, first of all, there is set up some proper apparatus of worker representation. The provision that information must go to trade unions is dangerous and also inappropriate. There are many examples, some of which my


hon. Friends gathered when we had a nation-wide industrial campaign a year ago, involving information which was either available at Transport House or at union headquarters and yet which was not passed down the line to those who could understand it and use it in their own industrial experience. There are also cases of information being given, even in present conditions, to local union officials, who are then extremely jealous and who sometimes place obstacles in the way of that information being passed on to the workers on the shop floor.
The only people who should have a right to this information are those with a definite loyalty to the company concerned either through being members of the company under a new company law, or else being members of a supervisory board or works council. But the present provision tends to create two classes of trade union member—those trade union members on whom the Government have conferred the privilege of special inside information—and "the rest", who are to be left in their present regrettable and undeserved ignorance. This creates a privileged class of trade unionist and in our opinion is wholly deplorable.
I hope that if somebody else from this bench manages to catch Mr. Speaker's eye during this two-day debate this theme will be developed. I shall not pursue the matter now.
I welcome the greater part of the provisions in respect of Planning Agreements—partly because, in so far as anything these days is "voluntary", they certainly are. The only proposal which I have to make under this heading is that the first Planning Agreement should be between the NEB and the Secretary of State for Industry, otherwise the board's operations will enjoy an inappropriate obscurity.
There is a danger that the Bill, far from being the Soviet monster as described in the Tory Press, will be a piece of rather dreary window dressing. It will also run the risk of being expensive. Somebody has described it as potentially the most expensive game of Monopoly ever played. Certainly as it stands we regard it as bad by reason of its gross uncertainty. It is an infinitely flexible framework. Since uncertainty is notoriously bad for industry, which

essentially needs continuity, we shall look for substantial major amendments in Committee and on Report if, as we still hope, we are to be able to consider voting for the measure on Third Reading in its final form. But, as it now stands, I shall recommend my right hon. and hon. Friends to vote against the Second Reading tomorrow.

6.19 p.m.

Mr. Ian Mikardo: With all respect to the hon. Member for Colne Valley (Mr. Wainwright)—and I have a great deal of respect for him, as I think have many other hon. Members—I found his speech most puzzling. Three-quarters of it made a powerful case for the Bill—a case which I should have been pleased to make myself. The hon. Gentleman had some criticisms to make of the Bill—and so have I, as I shall enunciate in a moment—but it is a tradition of the House that when one is broadly in line with the provisions of a Bill but thinks it can be improved, one gives it a Second Reading and has a bash at improving it later.
What I found incomprehensible about the hon. Gentleman's speech was the total dichotomy between the body of the speech and its conclusion. It seems to be stretching the elastic of logic very hard indeed to say all he said about the great gap that needs to be filled, and to conclude by saying that the Liberals will chuck the Bill out anyway. If we do not give the Bill a Second Reading, neither the hon. Gentleman nor I nor anybody else will be able to amend it in Committee. I am quite prepared to join the hon. Member in seeking some amendments in Committee, but if he wants my help then, he has to give me help now.

Mr. Richard Wainwright: Has the hon. Member so little confidence in the stamina of his Government that he does not believe that if this were to be thrown out they would not come back with something better?

Mr. Mikardo: The hon. Member knows better than that. Even though he and his party have not had any experience of Government within the lifetime of most of us, he still knows well enough that when a measure is squeezed out of the parliamentary timetable it is difficult to find time to put it back.
I agree very much with the hon. Member when he says that in the industrial scene it is important to spot signs of impending decay early. I should have thought that the proper operation of the planning agreements system will do precisely that. Of course, it will not do it as quickly, as easily, or as readily as could be done by somebody, as he rightly said, living inside the firm. But nobody is envisaging that sort of measure of integration. Within the limits of what is possible with manpower, and not upsetting relations between Government and industry, I should have thought that the thing which the hon. Member most wants is precisely the thing which the planning agreement system set out to secure.
In France, where the planning agreement system is operated on a wide scale—manifestly the hon. Member for Henley (Mr. Heseltine) is not aware of that—it is working to no insignificant extent in that way. What I find interesting is that the planning agreement system seems to be an extension to Government and industry, especially of Government as buyers—a system which is carried out by two or three large-scale multiple retailers vis-à-vis their principal suppliers. There are two or three large-scale retailers which operate a sort of planning agreement system with their principal and regular suppliers. They give information about projected demands to those supplier. In return, they get information about how those suppliers are working, what new designs they have on the stocks, what new plant they propose to buy—exactly as is intended under the Bill. I cannot think why that system, which I am sure every Opposition Member applauds when it operates in the private sector, should be thought by anybody to be reprehensible when it is operated in the public sector.
The hon. Member for Colne Valley was right in saying that one of the best ways to detect what is going on is to listen to what the workers say when they are lunching in the canteen or having a half pint in the pub on the way home. We learn a great deal by doing that. But, there again, this is precisely the function which the Bill will carry out. It is one of the purposes of the Bill. The hon. Member says that we should not have a Bill until we have a system of industrial democracy operating. That is making

the perfect the enemy of the good. It is saying that one cannot do a bit of good until one can do the job perfectly. I hope that on those grounds he will reconsider the last sentence in his speech, which fits so ill with all the rest.
I hope, Mr. Speaker, that if your eye does manage to light upon another hon. Member of the Liberal Party during the course of the debate—your eye would have great difficulty in doing so at present—the hon. Member's colleague, when he speaks, will say that the Liberals have re-thought the matter.
When I came into the House for the debate I was delighted to see the hon. Member for Henley (Mr. Heseltine) sitting in his place by the Dispatch Box ready to lead the Opposition into battle on the Bill. From certain reports I read in the newspapers over the weekend, I had feared that by the time we came here today he would be moved by his new leader to different pastures, or lesser pastures, or even no pastures at all. I should like to say, in tribute to the hon. Member, that I hope no such disaster befalls him. I would regret it very much if he ceased to be the Opposition's spokesman on industry, because nobody could be easier meat than he is.
I give to the Bill a somewhat modified welcome. As I have already indicated, there is much in it which I applaud. It fills a gap which is screaming out to be filled. But I have two reservations. First, it needs some stiffening in parts. Comparisons have been made between the parts of the Bill and the White Paper. We shall have to look at those when the time comes. But my hon. Friends should also make some comparisons between the Bill and what we said in our election manifesto. There are some differences. Those of us who are in the Standing Committee will have to see to what extent, if at all, those differences are justified, and whether they would be justified in seeking to close the gap.
The second point which concerns me is one which was mentioned by the hon. Member for Henley and on which I agreed with him. I refer to his reference to the reports of the interview between the Prime Minister and the Confederaion of British Industry, which appeared in our Press on Friday. As the hon. Member for Henley rightly said, these


reports appeared to suggest that the Prime Minister had said, in effect, that where the Bill differs from the White Paper it will be amended to bring it into line with that White Paper. I am not pretending to quote the actual words, but they were along those lines. That will not do at all. When one has done operation 1 and then, in the passage of time, one improves it to operation 2, and has made it better, it is very silly to go back to the standard of operation 1.
Anyhow, the Prime Minister quite properly meets the CBI to talk about the Bill. At some stage he will presumably be meeting the General Council of the TUC to talk about the Bill as well, and I cannot believe that the TUC would be very happy or satisfied if my right hon. Friend told the TUC what he is reported as having said to the CBI.
If someone newly descended from Mars, who knew nothing about what was going on in this country and this world, had dropped into this Chamber this afternoon and listened to the speech of the hon. Member for Henley as the first speech he had ever heard, he would have got the impression that the Bill was seeking to make changes in an industrial scene which was absolutely perfect. What the hon. Member was really saying was, "Why do you not leave well alone?" But are we talking about leaving well alone? Are we talking about "well"?
A few years ago we used to have to argue about the relative merits and defects of public ownership and competitive private enterprise. There was a case to be made out on both sides, in the light of the knowledge which we then had. But today, when everybody can see, standing out glaringly, the abject failure of the private sector of British manufacturing industry, there can surely be no ground for argument.
I could make out a case, of course, for Socialist organisation of industry. I could also, if I were put to it, make out the classic case for the free private enterprise system. In fact, sometimes I think I could make out that case better than do Opposition Members, who do not do it very well. But the one thing for which one cannot make a case is private enterprise on public doles. That gives the nation the worst of all worlds. One cannot make out a case for a system in which

the taxpayer bears the risks and has to shell out when they do not come off, whereas a tiny proportion of people called shareholders get the profit if the risks come off.
Over the years—and this starts a long way back—we have witnessed a total failure of the private enterprise system. As we have heard, time and again, it does not invest as much in new manufacturing plant as do its competitors. It cannot maintain the same rise in levels of productivity as do its competitors. By virtually universal agreement, it has a lower level of export skills than its competitors in other countries. By comparison with other countries, it has done practically nothing about import-saving; and its organisation of suppliers and after-sales service is a byword, unhappily, almost throughout the world. This is an abject failure. It demands a remedy.
The Conservative Party suggests no remedy. All that the Conservatives say is "leave well alone"—as though anyone could believe that this is "well". The hon. Member for Henley said that all we need to do is to create an atmosphere in which we shall attract people to invest. But let us look at all the things which successive Governments, of his party and mine, have tried. There has been one form of inducement after another. One cannot cajole the private sector to invest in British machinery in Great Britain; one cannot bribe it, induce it or attract it. Everything that the mind of man and everything that the best brains in the two major parties have been able to produce has been tried, and not one of the ideas has worked.

Mr. Anthony Nelson: I have listened to the hon. Gentleman's argument carefully. Will he explain why he feels that countries which operate a free enterprise system probably to a larger extent than ourselves—particularly West Germany—have managed to maintain a far more successful economic record than ours?

Mr. Mikardo: I have worked as a management consultant in this country and in some others. It would take too long to give a complete answer to the hon. Gentleman, but I shall give him a shorthand answer. We do not have the same standards of management, because we do not have the same objective criteria


of management skills in this country as that which exists in some other countries. Secondly, for decades—not merely for the last few years—industry in this country has distributed, in dividends, a higher proportion of its earnings and reinvested a lower proportion than is the case in almost every other industrial country. Thirdly, in other countries—West Germany is the most notable example—institutional investors do the job, or part of the job, which the NEB is to do here, but here institutional investors take a passive rôle about their investments.

Several Hon. Members: rose—

Mr. Mikardo: I shall not give way again. I promised to be brief. The hon. Gentleman asked a question and I have given an answer. We can debate this wider question on some other occasion.
The hon. Member for Henley said that all we have to do is see that industry has plenty of money, and then it will invest it. But the fact is that this freezing or skimping of investment goes back at least half a century. In that half century there have been many times when industry has been very liquid indeed. In those highly liquid periods we have had no great increase of investment. But now, hon. Members of the Opposition are saying that industry will not invest because it is the wicked Labour Government who tax it up to the ears, stop it having any free money, and threaten it with nationalisation, so of course it will not invest.
There was an argument earlier between the two Front Benches about what happened during the previous Conservative Government's period in office. I shall give figures to settle the argument. They were a Government of friends of industry. They helped industry, as we have tried to help industry. They were very generous indeed with industry, and the profits of industry rose very rapidly between 1970 and 1973. Retained profits, proportionately, rose even faster than all profits. But the figures for all profits are as follows. Between 1970 and 1971 they rose by 9 per cent. In that year investment fell by 7·6 per cent. Between 1971 and 1972 industrial profits rose by 15·7 per cent.—plenty of lolly around. In that year, investment fell by 9·8 per cent.

From 1972 to 1973 there was a big boom, and profits rose by 29·5 per cent.—tons of money around. Although investment improved a little in that year, the net result over the three years was that profits rose by over 60 per cent. but investment fell by over 20 per cent.

Mr. Tom King: The hon. Gentleman will be aware that the argument was between myself and the Secretary of State on this point. The hon. Gentleman says that he has been a management consultant. He must, therefore, be aware that profit from investment is not something that results the week after a decision is taken; that these things are planned and there is a considerable time lag between investment and profit there-from. I say this about the NEB—and the Secretary of State knows this; if the Bill is passed and the NEB makes investments, we shall not see the results of those investments for two or three years. The figures that the hon. Gentleman has given exactly prove that point. It was when profits had been made and when there was confidence that markets would continue, that investments started. That was why in 1973—the hon. Gentleman was very selective in his figures—[HON. MEMBERS: "Too long."]—that is exactly what happened.

Mr. Speaker: I must intervene. The hon. Gentleman who has just intervened is trying to catch my eye in this debate, but his long intervention has not improved his chance of doing so.

Mr. Mikardo: Although it is not for me to do your job, Mr. Speaker, I was about to say that that was not an intervention but a speech. I would not have given way if I had known that it was coming. I shall not give way to hon. Members who abuse the courtesies of the House in that way.
Let me continue the story—just to reply to the hon. Gentleman briefly. If what he says is right, now, in 1975, we ought to be getting the big investment arising out of the profits of 1973. Where is it? Let me continue with the story of those three years, because, again, there was argument between the Front Benches.
In those three years industry received subsidies from the Government amounting to £3,075 million. The hon. Member for Henley asked what proportion that was


of what industry paid in tax. The answer is that it was a bit less than half. In that period industry paid, in tax, £6,400 million, and it received in subsidies £3,075 million. In that period industry paid out in dividends £6,500 million. Is not it nice of industry to say "We have paid our tax so we are entitled to half of it back?" Which hon. Member, or which self-employed person outside the House—Conservative Members are always screaming about self-employed people—expects, as of right, that he will get back half of his tax? What we did from public revenues—whichever way one cares to look at it—was to rebate half of industry's tax or give it the money to pay half of the dividends which it paid. In spite of that, there still was no increase in investment.
Some companies did very well out of it. One company received more than £70 million in that period. One company—Guest Keen & Nettlefolds—received only £8·2 million, but it was sufficiently grateful to give a small thanksgiving offering in the shape of the largest single donation to the funds of the Conservative Party. This is something which strikes me almost as being a bit of corruption.
I now come to my last point. I apologise for speaking somewhat at length, but I was interrupted quite a lot.
The hon. Member for Henley said one other thing with which I profoundly agree. He wants the maximum of parliamentary accountability. It is now nearly 30 years since I came to this House, and in all that time I have striven on every conceivable occasion to increase the degree of accountability of the executive to Parliament. Perhaps I am not being altogether immodest if I say that during the years when I was Chairman of the Select Committee on Nationalised Industries I made a small contribution towards getting the Government and those industries—and people generally—to understand the need for this accountability, and especially—to take one of the hon. Gentleman's points—the need to ensure that when a Minister gives a directive to a nationalised industry he gives it openly and in a form in which it can be challenged. I am all for that, I worked to get it, and

we produced a unanimous report which recommended that that should always be the case.
However much we try, we cannot get away from the point made by my hon. Friend the Member for Tottenham (Mr. Atkinson). What on earth is the good of talking about making my right hon. Friend accountable to us when he is not going to be accountable to us however many restraints, controls and measures of accountability to this House we put into the Bill? He will be accountable not to us but to the European Commission in Brussels.
If the Secretary of State comes forward with a proposal and we pray against it and defeat it by two to one, provided that the European Commission says it wants that measure he will get it. There is no getting away from that, and my right hon. Friend has admitted it. What is the good of making false noises—because that is what they are—demanding accountability by my right hon. Friend to Parliament? Those who make that demand should seek to help to free us from the shackles which have taken our right to accountability away from us.

6.43 p.m.

Mr. John Davies: I am sorry that the hon. Member for Colne Valley (Mr. Wainwright) is not here, but I notice that no other members of the Liberal Party are here either. The hon. Gentleman hoped that other members of his party would catch the eye of the Chair, but it seems difficult for them to do that now.
If the hon. Member for Colne Valley were here I should ask him to listen to the few words that I have to say about some of his remarks, which to some degree were picked up by the hon. Member for Bethnal Green and Bow (Mr. Mikardo). When dealing with the quality and capacity of British management the hon. Gentleman had some curious words to say, which seemed to be both a travesty and a caricature of the reality. The hon. Member for Bethnal Green and Bow gave us his opinion in the light of a lifetime spent in international consultancy. He said that the levels of management were noticeably inferior to those in other countries.
I admit to having spent my life in industry, and to having been very much


engaged in international industry. It is noticeable that world wide, one sees at the head of some of the greatest concerns—both British and foreign—British managers, for the good reason that they are competent. There can be no doubt about that. These strictures are passed easily across the Floor of the House, but they are in ridiculously generalised terms and bear no reality to the generality of British industry.

Mr. Mikardo: I did not take time to develop the point. I take what the right hon. Gentleman is saying. Our best is at least as good as is to be found anywhere in the world, in terms of both companies and managers. Our first division is as good as any other first division. The trouble is that our second, third and fourth divisions are awful.

Mr. Davies: I regard that as another generality of an almost useless kind, but no doubt the hon. Gentleman is accustomed to making such statements.
The debate has dwelt considerably on the matter of investment, followed by a degree of invective against management for the failure of the country to invest. The fact is that the whole texture of investment is extremely complex. It is not just a question whether someone has the money or the profits. Many factors enter into investment, not least of which is the fact that because of the structure of our concerns we are accustomed year by year to seeing upwards of two-thirds of our total reinvested money derived from within the concerns themselves. Therefore, when there is a sharp downturn in profits, when there is a sharp reduction in liquidity, this has a penetrating effect, but if they can possibly avoid it companies will not allow themselves to stop off short investment which is in course, and for this reason one sees time lags at both ends of the operation.
I draw the attention of the House to an article on the subject of company liquidity in 1974, published in this month's edition of "Accountancy". The article is written by Adrian Buckley, and in it he seeks to show the real derived profits of British industry over the years, after deduction of stock appreciation and replacement depreciation, which the hon. Member for Bethnal Green and Bow, with his experience of consultancy, will

no doubt be able to appreciate without difficulty.
The writer of the article says that on this basis in 1968, compared with 1967, there was a net reduction of 33⅓ per cent. in adjusted profit. In the following year, 1969, as against 1968, it was down by 12 per cent. In 1970, as against 1969, it was down by 16 per cent. In 1971 it was 12 per cent. up. In 1972 it was again up by 12 per cent. In 1973 it was up by 1 per cent.—a poor year, being the year of the great commodity surge—and in 1974 it was down by 50 per cent. Can the hon. Member for Bethnal Green and Bow wonder, in the circumstances, that the impact on investment decisions as against investment performance is cataclysmic? That is what has happened to investment, and I ask the hon. Gentleman to study this article, because it will give him considerable enlightenment.
I am the last to seek to pretend that I have not learned a great deal since I have had the honour to be a Member of this House. I have tried to learn, but I was never in any doubt, long before I became a Member, that there are many activities within industry for which Government support is and always has been unquestionably needed.
In terms of high technology, aircraft, computers, and so on, it is ridiculous to imagine that this country, or any other, can hope to see industry succeed without a substantial degree of Government support given either in the way that we provide it or in the way in which it is provided in the United States, through major research contracts, and so on. There is a need also for substantial support in regional policy where, without it, there would be grave and serious distortion in regional investment.
I have always believed that the right way to bring about such measures is to go through the close mesh of this House of Commons, and I had hoped that it would be possible for all such cases and all such requirements to be subjected to the kind of scrutiny and intensive debate which goes on in this House and which I think refines intentions.
I learned during the years when I was in Government that there was a need for something more. There is a need for an instrument which can deal with matters which arise in a totally unpredicted and precipitate manner. I believe


that in some cases this instrument is necessary to deal with the orderly rundown of a business which is in irretrievable trouble, so that it does not result in a catastrophic effect both for the workers and the region in which it exists, or in other social consequences.
There is an alternative case where such support is necessary and where it has very often to be brought into action at exceedingly short notice. I refer to occasions when there is a sudden plunge in a company's affairs, which does not betoken a personal instability of a company or a personal non-viability, but where it is necessary to sustain a concern for a period of time. I suppose that the recent experience with the Ferranti Company is an example where, to return a company to the path of viability and satisfactory performance, we needed to sustain it. In such circumstances an instrument is needed. I do not believe that to seek to keep above water the nostrils of a concern which is irretrievably lost is anything but madness. I do not withdraw what I have said previously on the subject. I stand firmly by it.
I recollect picking up the pieces of some of the tragedies which the then Secretary of State left for others to retrieve. I had the misfortune to see the Upper Clyde Shipbuilders, among others, maintained in a state in which it could intermittently obtain a breath of air. It then went under the water again for an unfathomable period, and I had, somehow or other, to try to put it to together.
Any such instrument or measure needs to be essentially of a benevolent and co-operative kind. The intention is, by association with the management and workers and the financiers of the concern, to try to procure a situation allowing us to attain our objectives, be they social or the sustaining of a concern through to viability.
In those circumstances any instrument must be equipped with a series of safeguards which subject it to the kind of scrutiny and observation which this House should make. That was the case of the Industry Act 1972. It was an instrument which attained a number of these purposes. It was armed with a series of safeguards which, to the House and to the outside world, gave confidence

that the Government were not seeking to get into the vitals of British industry for its own benefit, but were trying conscientiously to help in a situation which could go extremely and dangerously wrong. I do not pretend that everything was perfect, but that Act, with its imperfections, clearly had that end in mind. That was clearly realised.
That Act, in that form, was in total contrast with this Bill. I do not see in it the desire to co-operate or to bring to bear the valid support of Government to management, to workers and to financiers, or to try to sustain the force of British industry. On the contrary, I see in it a force which is not so much interventionary as interfering, and which I greatly fear will bring about a degree of future internecine strife of the most damaging kind between Government and management.
All the safeguards in the 1972 Act have been disbanded. We saw the fall of the Industrial Development Advisory Board, despite the assurance of the Secretary of State that it would be maintained. We have seen with what contempt he dealt with the board and how he set it aside when it suited him to do so.
We have seen the safeguard involved in seeking to ensure that the Government never acted where there was a viable alternative. There was a safeguard whereby minority stakes were taken in concerns. We have seen the safeguards—that there should be an early disposal where at all practicable, and a review in 1977—swept aside. Therefore, this is a grossly expansionist measure, with no safeguards attached to it, and one which will be considered by industry as an unhelpful measure for its future. Industry has no confidence in the Minister. I am bound to tell him that. I am sorry that it should be so. It is useless to imagine that he stands there as in some way the guardian of industry. That is a travesty of the truth. He is not a guardian. I speak with knowledge. He has always been regarded as a scourge of industry, and he will continue to be so regarded.

Mr. Roger Stott: Will the right hon. Gentleman define what he means by "industry"? Who is industry, what is industry, and what does it comprise?

Mr. Davies: As I understand it, industry is a complex organisation, involving management, owners and workers.

Mr. Stott: If the right hon. Gentleman means workers, he is wrong.

Mr. Davies: I am speaking of a complex organisation. I do not speak of individual bits. That is the fault of the party opposite, which constantly speaks of industry as though it were bits. It does not consist of bits. It is a composite unit, which has to work as one. If the Secretary of State seeks abruptly to undermine it he will reap the rewards which he deserves. He is regarded as a menace and a danger to industry.
The consequence of pushing through this measure will be the utmost damage, because the confidence of industry will be undermined. Confidence in the Secretary of State has already been undermined.
I hope that the outcome of today's debate will be the defeat of the Bill and the withdrawal of the Minister.

6.58 p.m.

Mr. Doug Hoyle: I listened with interest to the speech of the right hon. Member for Knutsford (Mr. Davies). I agree with my hon. Friend the Member for Westhoughton (Mr. Stott) that the right hon. Gentleman appeared to express the view of the boardroom and neglected the feelings and sentiments of the employees. The right hon. Member made an analysis. However, the policy he proposes will lead to further unemployment in parts of the country where it is already dangerously high. An attempt was made by the former Conservative Government to carry out that policy. I would have hoped that he could have learned a lesson from his experience while in Government.
I welcome the opportunity which is afforded to us under the Bill of a radical departure from the traditional method of funding and financing. The reasons have been stated by my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo). In the past, Conservative and Labour Governments have attempted every other method and there has been no response from industry. Therefore, we must look at new and radical solutions to the problems facing industry.
I was disappointed by the speech by the hon. Member for Henley (Mr. Heseltine). There was not one constructive statement throughout his speech. I would have thought that the Opposition would have welcomed the opportunity to look at a new Bill which might distract them from the Finance Bill now in Committee where they are defending tax havens such as the Isle of Man and the Channel Isles and the transfer methods of multi-national companies. However, it has not been so.
The Tories are not attacking this measure because it is a new means of securing public ownership or nationalisation. On occasion they are prepared to accept even that—for instance, with Rolls-Royce. The nub of the opposition is to the idea that State participation and help should be used to change the whole structure of ownership and decision making in industry.
As for the National Enterprise Board, the Tories should look at the successful record of similar organisations in Sweden and Italy. If that can be done in those countries there is no reason why such an operation cannot be successful in Britain. Just as the Italian organisation took industry to southern Italy, I hope to see the National Enterprise Board bring industry to constituencies like mine which have declining populations. This body offers to such areas new hope of providing positive action in place of money being spent aimlessly, as it was so often in the past.

Mr. Nelson: The hon. Gentleman mentioned Italy as an example. Will he expand on the point? Does he suggest that the problems Italy is currently presented with are in no way a reflection of the area and its form of organisation? Surely this goes completely against his argument rather than for it?

Mr. Hoyle: I should like to know which firms in Italy the hon. Gentleman is complaining about.

Mr. Nelson: IRI.

Mr. Hoyle: Italy is not in its present plight because of the activities of the State sector. Italy's present plight is due to other financial considerations, not to State participation. The hon. Gentleman would have done well to have compared


the NEB with what has happened in Sweden, where such enterprise has been a great success.

Mr. Eldon Griffiths: In fairness to my hon. Friend the Member for Chichester (Mr. Nelson) the hon. Gentleman should recognise that he mentioned the Italian IRI, which is the State equivalent in Italy of the intended National Enterprise Board in Britain. Does the hon. Gentleman know that just a year ago the IRI had to return to the Italian Treasury for $2,000 million equivalent of extra money and that its chairman—Signor Petrilli—complained that its real problem was not knowing whether it was supposed to be a business man or a vet?

Mr. Hoyle: Certain companies within IRI have been a success. The Italian oil company has undoubtedly been a great success. State participation under the National Enterprise Board will also prove to be successful. All efforts in the past under Labour and Conservative Governments have failed to result in the necessary level of investment in the manufacturing industry. The NEB offers us a positive way forward.
I hope that the trade union movement will accept the challenge presented by the Planning Agreements and will press companies to enter into them. The union of which I am vice-president, ASTMS, has already prepared a draft Planning Agreement which we shall issue to our members, who, we hope, will make representations to their employers that they should enter into Planning Agreements. If the trade union movement has the vision to grasp the opportunities which are now presented, Planning Agreements will provide a means of changing the face of the firms for which their members work.

Mr. Peter Viggers: Will the hon. Gentleman's union contemplate taking industrial action to persuade companies to enter into Planning Agreements?

Mr. Hoyle: I have not suggested that. I have said that the members of my union will be making representations. Surely the hon. Gentleman does not object to that. Why should they not? Their life is bound up with the welfare of the firms for which they work. Should they

not have information of a status equal to that provided to shareholders?
I welcome the provisions relating to information to be provided to trade unions. All the items of information listed in the Bill are relevant. However, I believe that trade unions should have information about the timing and location of investments. A company's prices policy, particularly in relation to transfer pricing, is directly relevant to those working in the company and, in the case of multi-national companies, is relevant to import saving.
Information about product development is also relevant to those whose lives are tied up with a firm. Trade union members should be told what products are on the stocks and what it is hoped to develop. Such information is relevant to job security. Information about a company's development plans, particularly with regard to their regional implications, should also be provided.
The need for a change arises because the traditional method—the market mechanism—in a capitalist economy has failed so badly. In the two years to 1974 bank advances totalled 96·4 per cent. Of those, bank advances to manufacturing industry were 79·5 per cent. Total bank advances to other financial institutions were 93·5 per cent. Total bank advances to property companies were 174 per cent. Thus, manufacturing industry was well down that league table.
In 1971 the Stock Exchange provided 5·7 per cent. of the capital to individual commercial companies. By 1973 the figure had dropped to 1·1 per cent. In 1974 the figure fell to 0·2 per cent. These figures show that the Stock Exchange is totally irrelevant to supplying investment to the manufacturing sector, which is where it should go.
It is a condemnation of the previous Tory Government that from June 1970 to February 1974 investment in productive manufacturing industry fell by 11 per cent. That is why it is so essential we take new methods to deal with the present situation.
I believe that the NEB and Planning Agreements, because they will cover a wide spread of companies and industries, will set a standard for prices, output and product ranges that will affect the


decisions of other companies within the same sectors. They will set a new standard that will have to be taken into account not only by the employers in the industries concerned but by all the national interests.
I should like some clarification on some points that have occurred to me on reading the Bill. First, why does the Bill provide for Planning Agreements and information to apply only to manufacturing industry? There might be companies in the pharmaceutical industry, for example, which are partly involved in manufacturing and partly involved in retailing. Would they not come within the orbit of the Bill? In the White Paper "The Regeneration of British Industry" it seemed that many trade unions would not be regarded as parties to Planning Agreements but as bodies to be satisfied. On my reading of the Bill that seems to be missing from Clause 14.
Further, there is the problem created in our society by the multi-national companies. I am not clear how the Bill will deal with that issue. Clause 12(2) defines a body corporate as a body
to be resident or not to be resident in the United Kingdom according to the central management and control of its trade or business is or is not exercised in the United Kingdom.
I am aware that many of the multinational companies that operate here are of American origin and that many of the subsidiaries that are British are operated and controlled from the United States. Does that mean that the British subsidiaries would come within the meaning of the Bill as resident companies?
The activities of the Manpower Commission must be wedded with the provisions for the NEB and Planning Agreements. That is vitally important if we are to get the retraining facilities that are so vitally necessary. It is of the utmost importance if we are to take industry to the regions where there is a large amount of skill concentrated in the old and declining industries. If we do not take industry to the regions there will be the problem of unemployment, but if new industry is taken to the regions there will be the problem of retraining. I should like to see, as has happened in Sweden, a close liaison between the Manpower Commission and the activities of the NEB. I

should like to see an expansion of the Manpower Commission's budget to cater for the retraining that is necessary.
If we get all those things and get the Bill placed on the Statute Book we will have a new and powerful opportunity to provide manufacturing industry with the investment that it so sorely needs and to bring new prosperity to Britain.

7.12 p.m.

Mr. Michael Grylls: I listened with care to the remarks of the hon. Member for Nelson and Colne (Mr. Hoyle). I listened with perhaps a little sadness. At the beginning of his remarks he referred to a change in the structure of industry. I suspect that he was hinting at a type of industry that disappeared perhaps 30 years ago. Is he not aware that industry is owned not by one, two, three or half a dozen people but by millions of people who have invested, for example, in pension schemes and unit trusts? It is the small shareholders and the small investors who own industry. I would guess that even the hon. Gentleman's own union is a major shareholder in British industry through its pension fund. To suggest that there will be a major and dramatic change in the ownership of British industry is so much waffle.

Mr. Hoyle: Does the hon. Gentleman not agree that at the moment British industry is dominated by multinational companies, and that many of them are American owned and have no shareholders in this country?

Mr. Grylls: I do not think that that is true. The hon. Gentleman should remember that American multinational companies with manufacturing units in this country have, since the end of the last war, provided more than 100,000 jobs in development areas, the sort of area that the hon. Gentleman represents. In many ways they have performed a good and useful task.
The hon. Gentleman suggested that there is some kind of similarity between the NEB that the Government are proposing to establish and foreign organisations such as the Statsföretag AB in Sweden, and the IRI in Italy. No doubt he is aware that the Statsföretag AB is a different body from what I guess he hopes the NEB will be. It does not have as its


prime objective the taking over of a large sector of manufacturing industry. If he had done his homework a little better he would have known that.
Since July of last year the Secretary of State has been engaged in a propaganda build-up to try to set the scene for the Bill we are now discussing. I do not think that anyone in the House would doubt the right hon. Gentleman's sincerity and his passionate desire for further large-scale nationalisation leading possibly towards a complete Socialist corporate State. Few people here think that that is not likely to happen. One of the right hon. Gentleman's colleagues, the Secretary of State for Northern Ireland, was very worried about such an event taking place. In a letter that he wrote to the Yorkshire Post on 21st February 1974, he said:
I am concerned about the dangers inherent in it.
That is further nationalisation. He continued:
I fear that it will bring about only a corporate State and some type of bureaucratic State capitalism.
The right hon. Gentleman's view of further widespread nationalisation is giving alarm not only to my right hon. and hon. Friends but even to members of his own Cabinet.
Where we criticise the right hon. Gentleman strongly, as did my hon. Friend the Member for Henley (Mr. Heseltine), is in his use of bogus statistics. I think that my hon. Friend dealt very effectively with the suggestion that £2 million a day is being paid to industry by the British Government. The Secretary of State totally forgot to say what that money has paid for, and particularly in recent years. A large amount of the money that has been given to industry has been directed towards Concorde and regional development, for example.
The corporation tax yield in 1974–75 was £3,265 million. If we put that figure in realistic terms which we can explain more easily to our constituents, the corporation tax yield from British industry pays not only for the education budget but for the budget directed towards services for the elderly and the combined health and personal services presently provided. That is what British industry

is doing by providing that amount by way of taxation for the Exchequer. The top 20 British companies alone contributed, through wages and salaries and deductions in PAYE, in the current year over £800 million.
The Secretary of State, in trying to set the scene for the failure of British industry, is setting about a disastrous policy. On every possible occasion he has sought to devalue the work of British industry. Lord knows that we would all criticise. It is healthy that Parliament should criticise anyone in the land, but it is totally wrong for the Secretary of State, whose job it is to be responsible for British industry, to seize every opportunity to denigrate British industry. If we were living in the conditions that applied 500 years ago I would send the right hon. Gentleman to the Tower of London. It is an utter disgrace for him to do that sort of thing.
When the White Paper was produced the scene had not been fully set. We therefore first opened the White Paper with excitement shortly after the House went into the Summer Recess. We were happy to see that the Government believed in
both efficient publicly owned industries and a vigorous, alert, responsible and profitable private sector …
We thought that everything would be all right and wondered what the fuss was about, but the odd thing was that, whatever we thought, nobody else believed it. Nobody in industry thought that all was well because everyone else had taken the trouble to read the speeches of leading members of the Labour Party. All the members of the Left wing who are present below the Gangway on this day of celebration whose speeches which nobody thought would be read by anybody were being read by people in industry, realised that the commanding heights were about to be taken over.
Then we had an exciting, rather intimate, debate when the Minister of State at the Department of Industry, two days before we rose for the Christmas Recess—I think in the middle of the night, when there were not many Members present—made a massive slip when he said that it was his personal wish that the capitalist system should be totally eliminated.
Therefore, I should ask the Secretary of State, if he were here—and I warned him that I should say one or two things about him—whether he was surprised at the deluge of criticism which has fallen on his shoulders since he started on this policy. I ask the Under-Secretary of State to convey this to the right hon Gentleman: does he ever lie awake at night wondering whether he might be wrong and that the rest of industry might be right? The late Richard Crossman, as appears in the articles in the Sunday Times about the stirring exploits of the former Labour Government, had a good description of the Secretary of State. He said that the right hon. Gentleman had
a mechanical non-conformist self-righteousness which seems to come out even more strongly in office.
Dick Crossman put the matter very well, much better than any of us could put it.
The tragedy is that, with all the problems facing industry, we have the Bill as it is. Let us consider the scenario. The liquidity situation in most firms is highly critical. The investment position is very bad. Investment intentions are lower than ever. Yet what are we doing in Parliament? We are debating a Bill—with the Government putting forward one view, the Opposition putting forward another and the Liberals, with no representative present, putting forward no view at all—concerned with nationalisation which we thought had gone out with the ark. It is no wonder that people say that sometimes we are irrelevant. We should instead be talking about the important matters.
I should like to suggest an alternative, more constructive scenario which might in another world take place. Let us suppose that the Secretary of State said that he was determined to set about making the nationalised industries successful and profitable and perhaps create an IRI into which all State holdings could go and be managed in a similar way to the Statsföretag over which the Government maintain only financial control and the industries run themselves. Let us suppose that we were planning and working for worker participation, worker directors and a greater feeling of belonging to industry, with a greater flow of information. Those are important matters which are needed in nationalised industries as well as in private industry.

In such a scenario we might be talking about freeing industry from price control.
If the Secretary of State had put forward a policy of that type, he would have had much greater support. If he said, "I shall set about making nationalised industries profitable and successful", he would perhaps create his own planning agreements because inevitably, with a State body owning all the State shareholdings, there would be a form of planning agreement. It would be necessary.
But let the nationalised industries prove their case to the rest of industry. Do not let the Government ram down the throats of the rest of private industry a policy which has not been successful. Let the Secretary of State declare that the Government have no intention at present to go in for more nationalisation. Let him say that he will continue to work the Industry Act 1972, which was beginning to make an impression in areas where industry and jobs were badly needed. If the Secretary of State did that, he would be entitled to ask for our support, and he would enjoy the confidence of industry. He would be entitled to say to private industry, "I want to persuade and cajole you into making these changes and to experiment with new forms of working".
France has the Sudreau Report. No doubt the Minister has a copy of it in French in his office. I shall not quote from it in French, but it has been very useful. The French Government have said, "Let us have a debate on this. But do not let us try to force it down everybody's throat". The report says that there is a need for greater working participation. We all agree with that. There is a need for greater job enrichment, particularly on assembly line work. There is a need for greater profit sharing in industry.
If France can have a free, open, national debate to find solutions to the problems of modernising industry, why cannot we? Why must the Government ram further nationalisation down our throats? It could and should be possible to have such a debate in this country, and we could then work towards a new era of industrial democracy. The tragedy is that where there should be dialogue we have only dogma from the Government. That, above all, is the tragedy of the Bill.
I want to put to the Minister one or two points on Clauses 9 to 13 about the transfer of British manufacturing undertakings to foreign control. Why does the Secretary of State need further powers when he has all the power he needs under the Exchange Control Act 1947? If a foreign company wants to take over a British company, it has to obtain exchange control permission. Why is it necessary in the Bill to make provision for prohibition orders and vesting orders? The Minister may fairly say that those are Committee points, but I should like to know the reason for the proposals in the Bill.
There is a certain conflict in the Government's approach, as we have seen throughout their dealings with industry. The Chancellor of the Exchequer speaks with one voice and the Secretary of State for Industry speaks with another. On Thursday, the Chancellor said that he wanted to encourage foreign investment in this country, particularly from the Arab oil-rich states. It was a reasonable and, in the present situation, very sensible case to make. Three days later we are debating a Bill which proposes to give the Government Draconian powers to stop foreign investment. Who is speaking for the Government, the Chancellor or the Secretary of State for Industry? If the powers go through it will not be the Chancellor who wins because no foreigner will invest in new plant in Wales, Liverpool or anywhere else where we need investment. They will see the threat first of a prohibition order and then a vesting order and nationalisation hovering over a company which had until then been free.
It was cavalier in the extreme for the Secretary of State to gloss over Clauses 9 to 13 by saying that the provisions concerning the transfer of control to foreigners will be generally welcomed. We must have a more detailed explanation. I ask the Government to take the Bill back, recognise that it is a mistake and that it will have a disastrous effect, and instead do something positive. They should tell industry, both management and the TUC, that they want to see effective and realistic changes and modernisation in British industry, that they want to do it by consent and consultation as is

proposed in France in the Sudreau Report. Let the Government say to industry that they have thought again and that they will not steamroller it into an out-dated industrial system which has so far proved to be ineffective.
If the Government want further investigation let them set up a Royal Commission on industry. Labour Members may laugh, but no one should be frightened of having industry examined by a Royal Commission. It might even recommend nationalisation, but it would take a positive and constructive look at the situation and if it thought that nationalisation was the answer, the Government could demand our support and we would give it because we should be doing something of real good for British industry.

Mr. Deputy Speaker (Sir Myer Galpern): Order. Mr. Speaker indicated to me that about 18 hon. Members were attempting to catch his eye. We can do a very neat bit of division here. The debate is due to finish at 11 o'clock. Eighteen Members could take 10 minutes apiece and we should just finish on time. That would also show a co-operative spirit on behalf of those taking part.

7.33 p.m.

Mr. Max Madden: It is to be hoped that this debate will dwell on industrial reality rather than political dogma. It was unfortunate that the hon. Member for Henley (Mr. Heseltine) did not choose that course. His speech seemed to be based on the collected works of Aims of Industry, and in his enthusiasm to denigrate the Bill I almost expected him to dive into the Dispatch Box to haul out a rubber white elephant and lapel stickers attacking public ownership. The hon. Member for Surrey, North-West (Mr. Grylls) wanted to put my right hon. Friend the Secretary of State in the Tower of London for having the audacity to present the Bill today. Conservative Members are well known for their desire to put people in prison, but I have sad news for them, because they will have to put the entire Labour Party in the Tower in this instance. This Bill is not the work of one man—my right hon. Friend—it is the work, after years of discussion and consultation, of the entire Labour Party. It has been clearly presented in two manifestos, which


have won the support of the majority of the people. There is no secrecy about our industrial and economic intentions, as represented by the Bill. They have been welcomed and endorsed by the public.
Industrial reality has been the theme of the speeches by my right hon. Friend the Secretary of State, my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo) and others. The sad reality is a picture of consistent low investment, poor productivity, low pay, poor conditions, regional imbalances and indaquate research and development. This is the industrial reality not of the present day, or of the last few years, but of recent decades in Britain. I hope that this debate marks the beginning of a real attack on our industrial and economic problems.
What has been the reaction of big business to these facts? It has been, all too often—egged on by the media and others who have all sorts of other interests to exploit—to point an accusing finger at the British worker. We have been told all too frequently that British workers do not work hard enough, that they do not work long enough, that they are paid too much, and that they strike too much. All that conflicts with the truth. British workers, by and large, are getting sick and tired of fat men telling them to pull in their belts. This has been the exhortation all too frequently from Ministers and other politicians who have trailed the land trying to cover up their deficiencies and shortcomings by blaming the people on the shop floor—the producers of the real wealth. It will not wash any more, because we know that the finger of accusation must be pointed now where it should have been pointed years ago—into many of the company boardrooms.
The industrial reality for Britain today is that it is dominated by a number of very powerful companies. By 1970 the top 100 manufacturing companies controlled more than half of British manufacturing industry. In 20 of the 22 industrial and service sectors of the economy, six firms or fewer controlled the assets of the top half of industry. On average, only four firms controlled half the assets of these 20 sectors. For 150 of the subsectors—or more than half of industry—

the five largest firms accounted for more than 70 per cent. of industrial sales.
These companies are all multinationals. They have global investment programmes. Decisions in them are taken by a very small and exclusive group of men who shut out Governments from their decision making. Through prices, taxation and location they enjoy advantages which outweigh any regional incentives offered by Government. They exploit the cheap labour situation in Third World countries, and they enjoy tax and other advantages where available in the various tax havens. To compete with these terms would involve a massive increase in investment grants and other inducements to invest in Britain. These global investment programmes are based on time scales of between seven and 15 years. Their actions are taken over such a long period that they see out Governments, let alone Chancellors of the Exchequer. In many ways, therefore, decisions taken in Budgets and in strategic planning by individual Governments are irrelevant to these great companies.
We are today unveiling our industrial and economic strategy to deal with this and other problems which confront Britain. We say that we need an organisation like the NEB to spearhead new industrial ownership among the top 100 firms. We need to introduce Planning Agreements and to give unions the right of access to information. The NEB will be vitally concerned with job creation especially in areas of high unemployment. There will be powers to direct the Board to deal with these problems, and those powers will do much to reduce unemployment, which is now increasing and is still a great burden, and a cancer. The NEB will be involved with investment promotion, technological development, growth of exports, import substitution, the promotion of Government pricing policies and tackling the spread of multinational companies. I hope that it will also be concerned with the spread of industrial democracy, for that is at the root of the Bill.
We are aiming, through this advance, to open up pools of talent, expertise and experience. I am talking of the workers. For too long they have been excluded from the opportunities to decide what is


done in their places of work, how it is done, and for whom it is done. We are not talking about wishy-washy consultation, where perhaps the most important item on the agenda is the colour of the canteen walls. We are not talking about suggestion box schemes where, if a man is lucky, he may win a fiver for a bright idea. We are talking about opening up the whole area of industrial advance and are telling the workers, through their trade unions, "You now have an opportunity to take part in what is done in your industries."
We are not talking just about opening up the books and giving workers a day-to-day view of what is done; we are talking about perspectives over three, four and five years, so that workers can take a real part in developing the industrial and economic strategies of the firms in which they work. In turn, they will receive information for the Government which will allow them to do the job with greater professionalism.
I hope that the policy will be followed in the public sector. Having worked in a publicly-owned industry, I can say that far too many of the workers in them see no difference between working there and working in privately-owned industry. That situation must be tackled.
When Morrison set up the publicly-owned industries, he was obsessed with their administration. The structure was all-important, and little attention was paid to the working relationships in them. If we can begin to build these policies in the public sector it will give a great impetus to their development in the private sector.
It is important that the NEB and Planning Agreements are used in the major firms. The presence of the NEB in each key sector is essential. Only in this way will the economic strategy pursued by this Government reflect the priorities which are truly in the national interest. We must therefore be clear about the power of the EEC and the Commission. We must know whether the Commission hay powers to neutralise or reverse the legislation. It is clear from what has been said so far that the powers exist. So long as they are there, they can be exercised. That is a matter of major concern to the House and the people. For example, the investment of large sums of money in

British Leyland could be seen by the Commission and foreign motor vehicle manufacturers as unfair competition. Renault or Fiat could challenge that investment in the British courts. Nobody has challenged the powers that exist in the Common Market. They must be dealt with in the debate.
In my view and, I am sure, in the view of the overwhelming number of my right hon. and hon. Friends, the Bill represents a momentous social and economic advance. It presents great opportunities. It gives a new direction and new hope for British industry, with the opportunity for a real partnership between Government and industry. I hope that we shall embrace the Bill with all the enthusiasm that we can muster, that we shall profess its qualities throughout the country, and that we shall talk to the workers who are waiting for a true opportunity to take part in the industries in which they invest their lives and the lives of their families.

7.45 p.m.

Mr. Adam Butler: In view of your injunction that we should be as brief as possible, Mr. Deputy Speaker, I shall not try to take up the points raised by the hon. Member for Sowerby (Mr. Madden), or to embrace the Bill, which the hon. Gentleman seems determined to do.
The Secretary of State tried to draw a comparison between the Bill and our 1972 Industry Act, as if to try to associate us with what he is doing through the Bill and thereby, I suppose, implicate us in guilt by association. The measures are totally different. Our Act was an acknowledgement of the necessity for Government to intervene in British industry from time to time, and for very good reasons. It is generally accepted now that such intervention is necessary. If there is a dispute about the matter on our side of the House, I believe that it is about whether in each instance, each need for help, should be treated on its merits, on an ad hoc basis, according to policies well or vaguely defined; or whether we should spell out in which circumstances such help should be given.
The Industry Act 1972 was a brave attempt to do just that. It drew heavily on evidence which was being given at the time to a sub-committee of the Expenditure Committee, on which I was


sitting, by experts from the Departments, industry, the trade union movement and banking. Possibly that took the form of the public debate which my hon. Friend the Member for Surrey, North-West (Mr. Grylls) suggested should take place.
Our Bill was not perfect. I and a number of my hon. Friends were glad to be able to increase the parliamentary accountability of the relevant Minister. We also cut down the amount of money which could be spent without the Minister's coming back to Parliament. In the original Bill it had been proposed that the limit should be £10 million on each investment. I moved an amendment to reduce it to £1 million, and we finally compromised with the Minister concerned to settle for £5 million. Most of us on the Opposition benches are glad that it was no higher, in view of what the Secretary of State has been doing recently.
The principles of our Act are stood on their head by this Bill. It appears that Government intervention is to be a matter of deliberate policy, an act of first resort, a policy of buying up instead of selling off at the earliest possible time, which is what we required the Minister to do. One can imagine the reluctance with which the Secretary of State has had to agree to the 30 per cent. control limit, without his approval, which will be given to the NEB in its acquisitions.
One must ask whether the policy of intervention, and particularly the NEB itself, can work. I am sorry that the hon. Member for Nelson and Colne (Mr. Hoyle) has left us. The hon. Gentleman and others referred to the Italian IRI. I wonder why the Secretary of State did not mention it. The TUC told the subcommittee to which I have referred that it wanted something on the lines of the IRI, but with greater accountability. It was entitled to that view. The Secretary of State might have referred to it. Perhaps the reason why he was so quiet about it was that, contrary to what the hon. Gentleman said, the IRI's record is not found, on examination, to be something to be proud of.
One of the principal claims of the IRI, perhaps its most interesting claim, is that its holding company structure acts as a buffer between the politicians and the subsidiary operating divisions. I believe that up to a point that is true,

although there has been considerable political interference, particularly in recent months. But we find in the Bill that the Secretary of State is empowered to give specific directions to the Board, possibly in close detail, for the operation of all its activities, presumably including its subsidiary companies. One can already see the political appointees moving into those companies. That happened with IRI and attempts have been made in recent months by the subsidiary companies to get rid of the political appointees.
I saw a few eyebrows raised today when the Secretary of State said that he would remove some members from the Industrial Development Advisory Board. One thought, "Yes, because they have not agreed with him, or have given advice with which he has not agreed in a number of recent cases".
Is the IRI successful in regional development? The Secretary of State said that there was no prospect of altering the regional unemployment situation without the direct involvement of the NEB. But what happened with the IRI? The state of unemployment is very much worse in the South of Italy than in other places. The causes are different from those in many of our regions. But, despite legally required massive investment through the IRI and other institutions, the gap between the living standards of those in the South of Italy and elsewhere has widened. Only about 10 per cent. of the population of the South of Italy have jobs there. The policy of the IRI has not succeeded and there is no reason to suppose that the NEB will succeed.
Much play is put on the need for the improvement of industrial relations and using the NEB for that purpose. But the fact is that the unions—this is what the sub-committee was told when it visited the IRI in Italy—picked off the companies within the IRI that they knew would be bailed out. That was not working towards the improvement of industrial relations.
Finally, on the IRI and any comparison that we might make with the NEB, we are told that the Secretary of State, working with the Treasury, must satisfy himself that the duties to be imposed on the Board are likely, taken together, to result in an adequate return on capital.
What is the experience of the IRI? Thousands of billions of lire of assets yielding in the last four years a return on capital from 0·21 per cent. to an exciting 0·45 per cent. That is the record of the IRI. That is the contribution that it has made to the Italian economy. It is not surprising that the Italian economy is in the state in which it is.
The Bill and the vehicles to be set up under it will be used to increase investment in manufacturing industry. Of course, it can be used for this purpose—all too easily. It is an easy matter for the Secretary of State to authorise expenditure. We see it even now. The Government are printing money or taking it in tax from other people.
Why have we not had investments over the past few years? Investment by manufacturing industry rests, above all, on confidence. First, confidence in the short term that a company can sell the goods made by the plant and machinery in which it is investing; secondly, but more important, confidence in the long term. A number of hon. Members on both sides of the House have tried to put their fingers on the reason why investment over the past few years, since the war perhaps, has been less good than we would all like.
I believe that lack of investment arises from the absence of long-term confidence. Because the political and economic systems practised by the two main parties in this House are contrary to each other, the necessary long-term stability is not possible. To my mind, that is the fundamental weakness of our system. If we add to that in the last few years uncertainty about Europe and the terrible damage which most hon. Gentlemen opposite, including the Secretary of State, have brought about by their creation of uncertainty, we can see why British industry has not been investing in recent years. Of course, one cannot invest without cash. If the Chancellor takes £1,000 million extra out of British industry through advance corporation tax, as he did in the Budget, no investment is possible because there is no cash. Various deliberate acts perpetrated by the Chancellor and the general underlying lack of confidence are the reasons why we have been short of investment for far too long.
I turn now to the question of foreign shareholding, to which my hon. Friend the Member for Surrey, North West referred, and the apparent contradiction which he saw between the Chancellor of the Exchequer, who wants to encourage Arab and oil-producing investment in industrial equity in this country, and what the Secretary of State for Industry has proposed in the Bill.
I do not welcome the clauses in the Bill, because they are based on trying to defeat what I call the new bogy of British Socialist insularity—the multinational company, which has done a great deal not only for the workers of this country but for its economy. The clauses could help to regulate Arab investment. A few weeks ago I put a Question to the Chancellor pressing the point that we need to retain British, not State, control of our companies. We could use something in the Bill, but taken separate from it, for that purpose. We must direct, but avoid being swamped, by Arab investment.
My hon. Friend the Member for Henley (Mr. Heseltine) dealt extremely well with the disclosure of information by showing that, if it were to be total disclosure, it would make complete nonsense of commercial confidentiality. For anyone to suggest that we do not look for disclosure is wrong. Disclosure was written into the Industrial Relations Act. I recall the many hours that we discussed this matter with the hon. Gentleman who is now the Minister of State for Industry. Indeed, I have practised the disclosure of commercial information in negotiations with trade unions. Disclosure of information is practised throughout the country. Therefore, no one should think that we are opposed to the disclosure of information on principle. We take a somewhat more practical view than is apparent from speeches which have been made by hon. Gentlemen opposite.
The Bill is essentially part of the Socialist package which the Government are forcing on the country. We warned against it at the election. It was made clear in Labour's manifesto. It is a package of taxation designed to bring about the collapse of the private enterprise system.
I have referred to the action taken by the Chancellor of the Exchequer in his


March Budget. Either through stupidity, or ignorance of its effect, or as a matter of deliberate policy, the right hon. Gentleman took money through advance corporation tax from British industry and put it into a serious state of almost non-liquidity.
Now the capital transfer tax—thanks to the actions of my hon. Friends on the Finance Bill Committee we are achieving some amendments—still threatens to undermine one important part of our industrial set-up: the enterprising small business. Again, we have another form of taxation or levy on the self-employed business man. It is a package of taxation and bureaucratic intervention.
We believe that a partnership between the Government and industry is essential. In some areas, that partnership has to grow still closer. But it is certain that bureaucratic intervention and the extension of public ownership will add not one iota to the country's real wealth and to the happiness of those who work in our industries.

8.0 p.m.

Dr. Jeremy Bray: Listening to the hon. Member for Bosworth (Mr. Butler) I could not help feeling, "Methinks they do protest too much," like ladies of easy virtue lying back and crying, "Rape", perhaps in vain hope. At the same time, some of my hon. Friends expect too much from this Bill. Bills and Acts of Parliament seldom achieve anything in themselves. They enable people to achieve things.
Perhaps the most interesting aspect of the Bill is that it brings a new source of energy and a new drive into industrial policy which has not been there before—and that is the trade unions. The big question mark over the Bill is whether the trade unions will follow the admirable example of the trade union of which my hon. Friend the Member for Nelson and Colne (Mr. Hoyle) is vice-president—the ASTMS—in trying actively to secure Planning Agreements, or whether, under the sheer weight of organisational problems, they will carry on much as before.
Looking at the sources of the present difficult industrial situation and the decline in investment, if the Labour Party is to be criticised for what happened in 1970, it is for not having had a give-away Budget. The fault of the hon. Gentleman

opposite was in allowing demand in 1970 to fall too far, and allowing unemployment in the latter part of 1970, therefore, to rise. Industry cut back on investment simply because there was so much idle capacity during 1970, 1971 and the beginning of 1972.
The difficult in managing the economy is to maintain a sufficient level of demand to give the incentive to firms to invest, but not so much that there are no resources from which they can invest. In trying to maintain that balance, the Conservative Party came completely unstuck in the latter years in which right hon. and hon. Gentlemen opposite were in government.
The Bill is very modest in relation to the organisation of public enterprise in Japan—with the vast ramifications in Miti—and in France. It so happens that the main headline in the Glasgow Herald today concerns an arrangement which Scott-Lithgow is making with some French firms in connection with new offshore engineering. Asked whether this would not be impossible, the managing director replied that the French companies with whom his company were negotiating already had a large Government holding. At the same time, many of the oil companies operating in the North Sea are Government-owned, especially the French oil companies.
If we look for models of efficient public enterprise, we have already heard from the Opposition of Statsforetag, in Sweden, and of the iniquity of interfering with the objectives that it has. But I would remind hon. Members that Statsforetag has Members of Parliament as directors both on the board and on the board's subsidiary companies, to ensure that the companies take account of political and social considerations. There is a really effective integration between the economic and commercial objectives of the companies and the social and political reasons why those companies have been kept operating by public enterprise.
The Bill combines three elements which are apparently very disparate and which could have appeared in altogether unrelated Bills. But what is of interest is that they go together in the highly personal strategy which the Secretary of State has brought to industrial policy. I listen to and read about the concern which is expressed as to whether this


policy is that of the whole Government rather than of a single Minister. But, clearly and rightly, Ministers in all Governments have a rôle in the development of policies, and I compliment my right hon. Friend for bringing some new elements into industrial policy which are distinctively his own.
The National Enterprise Board is not a novel concept, nor is it in itself necessarily a very far-reaching one. We have a number of agencies. A good example is the British Steel Corporation, which has the powers which were contained in the articles of association of all the companies which went into the corporation. The corporation has just as wide powers as the NEB has.
What will matter is how the NEB operates, and this is a matter where encouragement must be given by the Government. What also matters is how it relates to the other two main aspects of the Bill. It can operate in three different ways. First, it can operate as a wholly autonomous body interfering sometimes here and sometimes there in no coherent pattern of activity, rather as the IRC operated during the period of the last Labour Government—brilliantly sometimes, a bit erratically sometimes, and certainly not systematically across the whole of industry.
Secondly, the NEB can operate in a totally comprehensive way, trying to fill the gaps and to plan the whole of British industry, virtually fulfilling a rôle as a kind of industrial economic Ministry, like a Japanese Miti, which this country has lacked.
Thirdly, the NEB can accept that the responsibility for planning in industry must remain with the Government and that it is the job of the Board to act as an energetic and efficient agent in fulfilling the tasks set it by the Government. I trust that it will develop in that third way.
In the second aspect of the Bill—in Planning Agreements—a new element is brought into the picture. It is that the relationship between the Government and individual firms is put on to a statutory, recognised basis instead of being the nudge, wink and backstage relationship which we all know it has been in the past. There is only one very slender clause dealing with Planning Agreements.

It is to be hoped that its scope will be widened considerably in Committee.
It is necessary to think through clearly some of the matters that have been raised. Why should the small and medium firms not be able to have Planning Agreements? If a big firm is entitled to a guarantee that its development grants will continue, why should not the same guarantee be available to a small or a medium firm? Clearly, the reason is to limit the expansion of bureaucracy. That is a powerful argument, but I do not think that it should be the final argument. Bureaucratic means could be found for extending the scope of the Planning Agreements.
According to the Opposition, the exchange of forecasts between the Government and firms is nonsense. I thought that the hon. Member for Henley (Mr. Heseltine) was right to outline what corporate plans are like in firms. But they can be better or worse, and very often the quality of those plans depends on the exposure that they have, if possible, throughout the firm and, even better, to a wider audience.
We can say the same of Government. Tory Members left the short-term macroeconomic forecast model in the Treasury in a frightful mess. It was a shambles. It was a rambling, monstrous creature. I do not think that, as Ministers, right hon. and hon. Gentlemen realise what was going on. It clearly happened because that planning process was not closely integrated with the sort of decision making that was going on in government. We know why. I do not think that any Tory Member would say that Lord Barber was the most technically acute Chancellor that they have had since the war.
The Treasury apparatus just fell to bits during the Conservative period of office. I am now alarmed to hear that Lord Kaldor and Mr. Godley appear to be being listened to in the Treasury as prophets of a latter-day doctrine of the balanced Budget—the doctrine that suggests that in some way it is possible to control the deficit in the balance of payments simply by regulating the public sector deficit.
This is an extraordinary doctrine, and the arguments used to support it are even more extraordinary. I quote it as an example of the disarray there is in government today, marked by the failure to


offer a wider planning system which brings industry and the country as a whole into the picture.
So long as this process is confined within the Treasury, to a highly technical discussion among officials and economists, with politicians looking on and not understanding what it is about and not being able to follow the implications of it all, we will get enormous nonsenses—like those we had from the Tory Government when they let the money supply get out of hand. No doubt we are committing similar nonsenses by too easily tolerating a large deficit in the balance of payments and allowing it to continue at too high a level for too long.
If we say, "Let us bring in some new element to the planning process"—if we try to create a complete framework in vacuo, and devise this in some terribly clever research institute and then say to the Treasury chaps, "Here you are, get on with it," the chances of its working are nil. It has to develop from practical experience. By all means let us have the design, the general schemes of development to which we work. But the concepts must arise through contact with practical problems with the institutions concerned, with, for example, the cycle of investment in the chemical industry or the unsteadiness of demand for motor cars. These are the issues which we will find trade unions pressing.
It is no good my right hon. Friend saying to the workers in Chrysler, "Let us have your corporate plan." The answer he will get from the unions is, "Let the Government stabilise the demand for motor cars and then we can tell you what should be done about industrial democracy, wage rates, investment and so on in Chrysler, Ford, General Motors and British Leyland."

Mr. Heseltine: The hon. Gentleman has put forward many important points. May I suggest that the framework for such a concept as he describes exists in the Little Neddy organisation? Of course it is not adequate. In part it is answerable to the wrong Government Department. The basis is there. All sides of industry are already involved. No commitments, no issues of principle, have to be gone into for the first time. It would be much more effective if we were to start with the organisation which exists.

Dr. Bray: I do not agree with the hon. Gentleman. I have attended meetings of Little Neddies and had direct meetings with trade associations and firms. It is quite clear that Little Neddies are not, and never can be, decision makers. Nor can trade associations. If we want to talk to people who are putting their names on the line we have to talk to firms. That is why a recognition of this in the Planning Agreements is essential.

Mr. Heseltine: It is done that way in France, where they have sector planning, talking through the trade associations. They have learnt to work together. There is a way in which decision making has been shared.

Dr. Bray: There are major differences in the way industry is financed in France which affect this. What is the content of these Planning Agreements? They are major practical strategies which we should see coming from industry. For example, in my view the whole world energy crisis and the world food problem mean there has to be major expansion in heavy engineering—beyond the capacity of any existing heavy engineering enterprise. The planning of that in all its aspects must clearly be the subject of Planning Agreements—but with National Enterprise Board activity as well.
As another example, it is clear that there ought to be a major petro-chemical complex in Scotland. We have to say to BP, "Here you are, go ahead. We want it to be not a £200 million complex in 10 years, but £20 million in a year." We want those orders to go to the appropriate engineering firms, so that they have a fair crack of the whip. Because the firms cannot finance that on their own, owing to the risks involved, it has to be a matter for the National Enterprise Board. For example, the ICI ethelyne plant at Wilton, where I used to work, which produced 350,000 tons a year, has been shut down for four months. Now is the time for a new ethelyne plant to be built, because by the time it is completed the demand will be there. As the right hon. Member for Knutsford (Mr. Davies) said, the chemical industry is up against it because it has not got the cash resources to invest. So it does not invest. In this process we need a lot of practical working out. This varies between firms and industries.


I would like to see the Planning Agreements strong enough to cope with this.
The most interesting aspect of the Bill is the importing of the influence of organised workers. It is not enough just to talk about the employees. They have to be organised in some way and in a dimension which transcends that of the firm itself. People have a permanent interest in their skills, which extends longer than their employment by any one company. By bringing in the trade unions we inevitably raise the question: where is the trade union that can cope with this?
If I may give an example, I have Satchwell-Sunvic, a GEC subsidiary in my constituency, whose shop stewards are complaining about the way GEC has stripped out the high technology products from the factories. We discussed the pressing problems but we had only just got going when the hooter went. Because the workpeople did not have cars and were dependent on buses they had to go off home. At that firm GEC makes no provision for consultation or for training for trade union members outside the working hours.
I have worked in personnel and in corporate planning in an electronics company for some time. It is not unreasonable to spend at least 1 per cent. of the total number of hours on this wider aspect of training. That is only two and a half days a year. Yet there are few companies which come anywhere near to that. Without that training, how realistic will the Planning Agreements be?
I do not share the Liberal view that we have first to create a framework of industrial democracy. I go in the opposite direction, and say that simply to give information is not to provide incentives strong enough to create the necessary trade union structure. What we ought to do is to give the trade unions representing the workers in a firm not merely the right to information but the ultimate right to decide what kind of management and ownership they want in their enterprise. Unless workers have that strength of incentive it is unlikely that we shall have the structure of trade unions developing fast enough to take advantage of the opportunities open to them through this Bill.
I have checked that the Long Title would give scope for amendments to give workers the power to take over their firms, with this properly accommodated within the structure of the financial objectives of the enterprise.
If we take these three elements together—the NEB, Planning Agreements, and power for trade unions to call for disclosure of information—we have by no means a solution to our industrial problems but we have the opportunity to look at them in a fresh light.

8.20 p.m.

Mr. Douglas Crawford: The Scottish National Party will oppose the Bill—not ifs and buts, like the Liberals—tooth and nail, root and branch. I say this not for doctrinaire reasons because no doubt some of the dogma, as has already been suggested, can be written out in Committee. I be-believe that one of the most dangerous pieces of dogma in this Bill is where it states that an industrial board should have power to take over 30 per cent. of a company. That amount of control in a company is nothing but full control.
We in the SNP are against the Bill because it is a further example of centralisation. The Scottish Council, which is a scrupulously non-political body, has inveighed for years against centralisation. It produced a report about centralisation in 1969 entitled "Scotland's 20th Century Nine of Diamonds" and its latest annual report, published in December, said more on this subject. Many Conservatives have been making similar statements, but we in the SNP have been getting sick and tired of those who mouth problems without giving solutions. We believe that the solution is that decentralisation of industrial decision making can be achieved only—and I repeat "only"—by political decentralisation.
The Industry Bill is the most obvious indictment to date of the uselessness of mere words from those who profess to have Scotland's interests at heart but who fail to do anything about the situation. But it is the system which has failed. It is Westminster which has spawned this Bill and centralisation has given birth to more centralisation.
It would appear that there was some backsliding between the Bill and the White Paper published in August, on


"The Regeneration of British Industry" which said,
The Government consider that the most effective assistance and support for the modernisation and growth of Scottish industry will be achieved by giving the Scottish Development Agency executive responsibilities over a wide field. It has therefore been decided that appropriate functions of the NEB should be carried out in Scotland by the Scottish Development Agency".
But what do we find in the Bill? Scotland is not mentioned once. Furthermore, the Secretary of State for Industry, in reply to my hon. Friend the Member for Carmarthen (Mr. Evans), said that the NEB will work throughout the United Kingdom. Again, the Bill in Clause 2 says that the functions which the Board may exercise are functions in
the United Kingdom or any part of the United Kingdom …".
That presumably includes Scotland. However, there is no single mention in the Bill of Scotland or of the Scottish Development Agency.
Does this mean that the Secretary of State for Scotland has lost yet another part of his pseudo-mock battles with the Secretary of State for Industry with which we are from time to time regaled in the Scottish Press? The Secretary of State for Scotland is a man for whom I have some admiration and not a little personal affection, but in this matter the old basso profundo has become castrato. It would appear that he has lost the battle with his right hon. Friend the Secretary of State for Industry and that the NEB will be working throughout the United Kingdom with no reference to the Scottish Development Agency.

Mr. Benn: I should not like the hon. Gentleman to continue his speech under a misapprehension. The Scottish Development Agency will be the subject of special legislation and the consultative document has been issued. Following the statement in the White Paper, power under Clause 7 of the Industry Bill will be transferred to the Secretary of State for Scotland in July of this year when the necessary administrative arrangements have been made. Therefore, he must say what he has to say about the NEB against that background.

Mr. Crawford: The right hon. Gentleman will be aware that Clause 7 does not cover everything to do with industry.

To those who say that we should await a Scottish Development Agency Bill, I would argue that the industry Bill legislation as it stands is overriding. It says that the NEB will have power in any part of the United Kingdom. The Secretary of State may disagree with that, but that is what it says in the Bill.

Mr. Heseltine: The Secretary of State went some way to point out that the NEB will have power to operate throughout the United Kingdom. I think that what the hon. Member for Perth and East Perthshire (Mr. Crawford) is saying is that the Board, based on London, will have the power to do the things he has mentioned. There is not a word of restriction in the Bill. Indeed, the Board will have power in the Bill not only to operate throughout the United Kingdom but, as I read the provisions, to operate outside the United Kingdom. Therefore, the hon. Gentleman is right in what he says.

Mr. Benn: It will not have overriding powers.

Mr. Crawford: I believe that the Bill is overriding and if any Scottish Development Agency Bill is to be meaningful it will have to dismantle those parts of the NEB which are to work in any part of the United Kingdom.
For this reason, if the Bill ever reaches Committee, my hon. Friends and I will seek to table amendments to ensure that the writ of the NEB shall run only in England and not in Scotland. We shall seek to stop the awful—and I use that word advisedly—centralisation which the Bill implies. If the Bill has the misfortune to pass its Second Reading, we shall seek to amend it to ensure that there is set up a Scottish Development Agency with powers answerable to a Scottish Assembly—in a way in which the present Bill suggests that the NEB will not be answerable even to the Westminster Parliament. By the Government's acceptance or non-acceptance of SNP amendments in Committee, we shall be able to judge, as will the people of Scotland, whether the Scottish Members of the two unionist parties—Labour and Conservative—are honest in their protestations of their belief that it is necessary for Scotland to have more say in her own industrial destiny.
The Bill as it stands may not be short but for Scotland it is certainly nasty and brutish.

8.27 p.m.

Mr. Brian Sedgemore: Ignorance may be bliss but it can also be tragic. Having listened to the representative of the Scottish National Party talk about increasing centralisation which will result from the Bill, I can only assume that he has not remotely understood its provisions.
We need not be modest about the Bill. It is not a modest Bill. It is a Bill which will pave the way to a new industrial revolution—a revolution which will change the face of British industry and the social structure of the United Kingdom. Despite its austere title the Bill will bring dignity, respect, responsibility and power to the working people.
On reflection, it seems strange that a country which has produced so many innovations in industrial processes down the years should have given so little thought to the development, nature and change of industrial organisation during the past 100 years and should have failed utterly to see that political democracy, if unaccompanied by social and industrial democracy, would come up against stress time and time again.
The Bill can be regarded as the wind of industrial change. It is a Bill which will end the single-minded ethos of the joint stock company, which places shareholders on a pedestal and everyone and everything else nowhere. The Bill will end the managerial society so beloved of commentators in the 1960s, with its insulting divisions between those who do and who do not take the decisions, and those who are affected and who are not affected by those same decisions. The Bill will transform and transfer industrial economics and ultimately social power in Britain.
All these changes will come about not through some complex political theory, not through some doctoral thesis of managerial control; nor even through the NEB, or even Planning Agreements. They will come about through one simple concept—the spread of information.
Information must surely be one of the most precious assets that anyone who wishes to control his destiny can have.

Nowhere is the absence of misuse of information more glaring in our society than in the realms of economics, finance and industry. Those with vested interests—the Press, the City, the Treasury, and those who own and manage industry—pour out a barrage of false and scandalous information, in addition to withholding it—[HON. MEMBERS: "Oh."]—in defence of an economic system which is becoming ever more unacceptable in its own terms and ever less appealing to the aspirations of the great majority of the people of this country. More nonsense is talked about how hard up individual companies are, how difficult it is for them to invest, about rates of taxation and incentives, about levels of profit and economic growth and about comparisons of performance between public and private enterprises than on almost any other subject.
What the British people want is the truth. What they cannot get from British industry is that self-same truth. In British industry the truth finds expression not so much in the giving of false information as in the total absence of information. Let us take the case of Chrysler. Here the United Kingdom management says one thing and does another. Who can believe that it could have got away with its piecemeal decisions to run down the tool room at Linwood, to break up the design team at Whitley, and to use Europe and the EEC to produce a new car in France and, in effect, to destroy the productive capacity of that firm in the United Kingdom had it been compelled to give detailed financial information to the workers concerned and compelled to enter into Planning Agreements with those selfsame workers?
Who can believe that an announcement would come that factories producing Imperial typewriters in Hull would have been shut if there had been Planning Agreements? Who can believe that British Leyland would have got into the same difficulties if it had examined a Planning Agreement presented to it by my trade union, ASTMS? Who can believe that things in the future will not be different?
It is extraordinary that in the third quarter of the twentieth century the people who create the wealth of this land should be given so little basic information


that affects themselves, their families, their communities and their towns. That information relates to demand, output, productivity, sales, profits, investment and manpower proposals, exports, imports and marketing. The reason why those people have been denied that information is that those who have withheld it know only too well that when they are given it they will directly use it to influence decisions which affect their lives, and they may even end by taking those decisions.
For a start, and a basic minimum, the process of wage bargaining will become fairer and easier for trade unions. We shall never again see the situation in which advisers from Ruskin College go to Ford and ask for information which would enable them to put in a proper wage claim but be refused that information.
There is also the fundamental question about low investment rates. We have heard some trivial interjections from the Opposition about this. It is not a question of rates of investment in 1970, 1971 and 1972. The experience of the past 30 years has shown us that conventional Keynesian demand management techniques will not produce the investment and sustained growth that this country needs. Over the last 15 years we have seen the growth of multinational companies which are not responsive to these conventional weapons or to changes in interest rates. They do not respond to changes in direct or indirect taxation, or to increases in investment grant, changes in depreciation allowances or changes in regional employment premiums.
The Bill will encourage investment in two particular ways. It will encourage direct investment by the NEB. The figure of £1,000 million a year put forward by the Tribune Group cannot be all that far out. The Bill will also encourage investment through the pressure of the trade union movement. Who can believe that when trade unions find out that their competitors are carrying out investment programmes, they will stand aside and watch their own firms not carrying out similar programmes? I suspect that within less than a decade the spread of company information will act as a dynamo for investment, will push the NEB and Planning Agreement along,

will push public ownership and public co-operatives along, and will lead to the spread of industrial democracy and workers' control.
It is because the Opposition Front Bench has grapsed the essential nature of the spread of industrial democracy and workers' control that Conservative Members are kicking up such a fuss about the Bill. I believe that Mr. Ralph Bateman has got it right for once and the Prime Minister has got it wrong. It is this spread of power that will make all the talk by the Bill's criticis of the creation of the corporate State look ridiculous. It is this spread of power that will put Sir Don Ryder in perspective and scale down his rôle in this affair.
We accept that those who are responsible for and are prepared to put up with the cosy decadence and inexorable decline of the British economy will not like the Bill.

Mr. Heseltine: With which statement by Mr. Ralph Bateman does the hon. Gentleman agree? Was it when he said that the Bill would spell the demise of British capitalism?

Mr. Sedgemore: His statement with which I agree is that the Bill could turn out to be a charter for workers' control.
Conservative Members who are prepared to put up with the decline of British industry have everything to fear from the Bill. Faint-hearted, middle class housewives in Barnet and Finch-ley will not like it either. The "City illiterates" on the Conservative benches will take comfort in the illusions provided by the Prime Minister in his hilarious account of Treasury wisdom and safeguards. I suspect the Treasury will find it as difficult to turn back the tides of history as other false profits before them, because neither dubious constitutional theory nor lectures on Cabinet government to Hugh Scanlon or Jack Jones are likely to hold up the progress of the Bill.
I understand that nerves are jangling in the boardrooms of British industry. I am glad that the hon. Member for Henley intervened, because I was coming to him. The industrial mafia on the Conservative benches will fight the Bill in their usual elegant style, firing from the hips at everything and anything that gets in their way, mouths open, spittle falling,


talking as fast as a train, and denying the truth all along the line. I dare say they will do what they did at the last election and draw diagrams in their bedrooms and boudoirs of the first thousand companies to be nationalised. Their inventive and possibly deceiving minds will no doubt rewrite the whole tone and tenor of the Bill.
I look forward to the Committee stage. The Bill is far from perfect, but it opens the road to Socialism in industry. The NEB could be turned into a great Socialist investment bank, as well as into a holding company. There are ideas and plans that Arab oil money may be channelled through the bank. I believe that when we go into Committee in joyous and constructive mood we should concentrate on those clauses which relate to the giving of information and secure for the trade union movement that it receives that information not through the courtesy of Ministers who may or may not like their ideas but as an absolute and inalienable right. If we do that, the Bill will do something which people have said Parliament cannot do. The real bitter-sweet aspect of the Bill, depending on which side of the House one sits, is that it could literally lead to the changing of one small part of the world.

8.39 p.m.

Mr. Tom King: The House should be grateful to the hon. Member for Luton, West (Mr. Sedgmore) for finding time from his heavy responsibilities on the Finance Bill Committee to come to this Second Reading debate. I have heard from some of my colleagues that his contributions to the Finance Bill debates are always worth listening to, and I think some of us now know why.
Nevertheless, for all his colourful language and the humour that he arouses on certain benches—particularly the Government Front Bench—it would be a great mistake to dismiss his speech as the rantings and ravings of a colourful member of the Labour Party.
Were Sir Don Ryder listening to these debates he would be mistaken if he thought that he was listening to one eccentric member of the Labour Party and if he did not appreciate that a large section of that party were criticising their leader's attitude to the Bill.
We shall debate many points in Committee, some of which we shall strongly challenge. However, on Second Reading we must consider the principle and background against which the Bill is introduced.
Reference has been made to the White Paper. The Bill makes no mention of the vigorous, profitable, private sector, to which the White Paper paid tribute. That is perhaps the most significant change. The Minister knows that that is a subject of great concern throughout industry. That concern has been conveyed to the Secretary of State, the Prime Minister, and the Chancellor of the Exchequer. It was understood from stories in the Press that this debate would afford the opportunity for reassurance to be given to industry by the Secretary of State on the way in which the Bill would be implemented. No doubt the hon. Member for Luton, West would cheer the fact that no such reassurance was given. No attempt was made to suggest that the original concept of the White Paper has been honoured.
My hon. Friend the Member for Surrey, North-West (Mr. Grylls) discussed the rôle of the Secretary of State, who is the Secretary of State for all industry, both private and public.
The White Paper referred to the need for a vigorous private sector. If we are to achieve the results we all want—a genuine increase in investment performance—the sums envisaged under the NEB do not begin to meet the problem. There must be a partnership of all sources of funds.
The Sunday Times has been running a series of articles pointing out that investment needs are probably between £15,000 million and £20,000 million. It was pointed out that the sums allocated to the NEB could be taken up by British Leyland alone. That is why the Prime Minister recognises the need for all sectors to play their part and the need for a vigorous, profitable private sector and a capital market which can genuinely channel the funds of all forms of investment into British industry.

Mr. Heseltine: It is possible that the funds for British Leyland will not be forthcoming as a result of the Bill. I am sure that my hon. Friend will wish to explore the possibility that the Government have in mind some other legislation


in respect of other industries, which will make great inroads into the sums available under this legislation. I am sure that my hon. Friend will want to press the Minister on that point.

Mr. King: I agree with my hon. Friend. That is one of the points we wish to pursue in Committee.
All hon. Members agree on the need to increase investment in British industry. The NEB and Government resources are insufficient on their own. The question is how we can obtain the total involvement of all sources of savings into this activity.
One purpose, as stated in the White Paper, was to ensure that industry knew where it stood and could press ahead with its plans. What has happened? There has been the biggest collapse of investment intention ever known.
I shall not pursue ad nauseam the point I made earlier about the difficulty of correlating years of profit and years of investment. Hon. Members may wish to pretend otherwise, but if they have any understanding of the problem they must know full well that investment occurs on a minimum of an 18-months to two-year cycle, and it is often three to five years before the effects are seen.
There are two essential requirements for investment. The first is cash, which is normally generated by cash injection or additional profits. The second is confidence that there is a market for which it is worth investing. Without those two requirements, no sensible company will invest.
It is against that background that we must approach the debate. I hope that we can do so constructively. Hon. Members will remember well, as I do, a very remarkable speech made on the Industrial Relations Bill by the hon. Member for Birmingham, Ladywood (Mr. Walden) in which he asked, on a basic issue of principle which seemed to divide the House: how is it that men of good will on both sides who genuinely have the interests of the country at heart can fail to reach agreement on a point such as this?
If I understand it correctly, the majority of the Labour Party—I exclude the hon. Member for Luton, West and certain of his friends—recognise that we must have a mixed economy in Britain and that it

is vital for all of us that the two parts of it co-exist successfully. Throughout the progress of the Bill through Committee my hope will be that we can make the necessary amendments to it, if we cannot secure its total withdrawal.
Hon. Members opposite must recognise the truth of the assertion by my right hon. Friend the Member for Knutsford (Mr. Davies) that there is a total mistrust of the Government and the Labour Party, certainly on the part of management in industry, which at present carries the responsibility of pushing through industrial investment. It is no good pillorying such people as though they are all men who smoke large cigars and drive Rolls-Royces. There are many progressive managements. I expect that hon. Members opposite have examples in their constituencies of good management—management which they think is genuine and progressive. Those people ought not to be pilloried by the Secretary of State at every possible opportunity. They are doing a tough job in a very competitive world, in increasingly difficult trading conditions.
The Bill must be judged against the question of confidence and trust. Hon. Members opposite seem to wonder why there is great concern about Planning Agreements. There is nothing new about Planning Agreements, in the sense of planning and involvement between Government and industry. The Conservative Government had informal discussions and informal planning of this kind, because it made such obvious good sense. It is vital that industry and Government know where they are trying to go.
Planning of this type must be approached on the basis of mutual trust. It is the interlocking nature of the Bill that is so damaging. What is a company to do about this matter, with all the difficulties of forward planning, which must be very tentative? What sort of presentation does it put on any Planning Agreement? Does it sound optimistic or pessimistic; should it sound cautious or otherwise, when it knows that the very people it is talking to may leave the meeting and issue a directive to the NEB to take some action about that very company? Planning Agreements will be a washout unless there is confidence and trust between Government and industry.
We come to the same problem on disclosure. The importance of good communications is recognised by anyone who has an understanding of modern industry. I had the privilege of running a plant that employed 700 people. I recognised the importance of good communications and I tried a number of different ways to improve them. I tried to achieve a full understanding of the investment programme and what we were planning to do. I tried to achieve, for example, an understanding of the order book, of the work level and the levels of employment. It is not easily done. There are problems. I know that members of the union are engaged in training courses so that they may be equipped to be able to understand a lot of the information that may come through to them. There are problems, but the matter must be undertaken against a background of trust.
The Secretary of State appeared to disagree, but our understanding is that he has been overruled. Instead of the disclosure being to the employees in a company it will now be released to the union representatives who may not be employees in the company in which the disclosure takes place. What does the district official do who is given information about two competing plants within his constituency? He may receive information that one company plans to make further investment which will increase its market share at the expense of the other company within the constituency. In the interests of industry advancing that is important, but it may involve some change in the employment ratio in the two plants. My impression is that the district official will be in a difficult situation. It is against that sort of background and with that sort of practical problem that we must judge some of the provisions in the Bill.
Next, I turn to the position of the NEB. The Secretary of State is alleged to have said that he wants to see decentralisation. A more massive centralisation of power than the NEB it is impossible to imagine. My hon. Friend the Member for Henley (Mr. Heseltine) has dwelt already on the huge powers that the NEB will have. If we take the experience of private industry we get the impression that the Board will run the risk of being one of the two worst forms

of private industry—namely, either a massive monopoly or a huge amorphous conglomerate. The problems of both, but particularly that of the conglomerate, are well known, particularly so in American industry. The problems of managing a conglomerate, bearing in mind the huge size of the proposed undertaking, will be a great disadvantage. The backing of the Government and of being a nationalised industry is a further disadvantage.
In considering the implementation of the social contract it is significant that wage rates in the private sector have increased by 17 per cent. in the past year and in the public sector by 28 per cent. In the present situation market forces and the restriction on demand have some effect on the private sector but little effect on the public sector. The lack of parliamentary control is a matter which I am glad to hear Labour hon. Members criticise.
There is clearly no mandate for the Bill. The fact that the Labour Party received only 28 per cent. of the votes of the people gives it no possible justification for introducing such a fundamental—[Interruption.] Yes, the total scored by the Labour Party at the last General Election was only 28 per cent. Labour hon. Members may like to check the figures. It is against that background that the Government have introduced what The Guardian describe as "Labour's public monster." I rest my case, if only on the parliamentary control aspect, on the words of the Paymaster-General in the present Government:
The NEB should be rejected on democratic grounds alone.

8.54 p.m.

Mr. J. M. Craigen: I agree with the hon. Member for Bridgwater (Mr. King) that British industry is in many ways suffering from an anxiety neurosis, but I doubt very much whether his party's rather unconstructive prescription is the answer for which we are looking.
The Bill spells out many desirable objectives. None of us would deny that strengthening the economy, promoting exports, maintaining full employment, extending regional development or socializing industry were desirable


ambitions. But will they be entirely fulfilled through the instrument of the NEB or through planning agreements? I do not say that in a derogatory way. There are, however, a number of matters which should be probed in more detail.
The Secretary of State for Industry stressed three main matters. The first was the need to reverse the decline in manufacturing investment. The National Enterprise Board could have a valuable rôle to play in this respect. However, post-war Governments have been largely concerned with promoting exports. They have continually stressed the need to encourage firms to improve their export performance. That is a desirable objective, but, in view of our import bills and the amount of furniture, wood pulp, timber and even zip fasteners which are imported, we might learn more about industry's deficiencies if we paid greater attention to the character of imports.
For example, why do people feel the need to buy Japanese, American or Italian cars rather than British cars? Why is Swedish, Danish or German furniture much more attractive than our own? The NEB will have to look closely at the important question of getting British industry to satisfy the needs of the domestic market just as much as trying to stimulate and encourage industries to export more.
There is an important link between the NEB and the Manpower Services Commission in achieving the right investment. If we are to direct investment into areas where it is needed we shall have to apply social criteria. It is all very well providing jobs with firms which manufacture paper bags, balloons or tooth picks, but if such items are not essential to the national economy the investment decisions of the NEB should encourage other forms of employment. That may not be easy.
The second main area, concerned employment at national and regional level. There have been reports that the NEB headquarters are likely to be in London. I should like to put in a plug for Scotland, though I shall resist the temptation. Suffice it to say that I hope that the Board—one of whose primary functions will be to stimulate employment in the development areas—will be located in a development area.
The references in the Bill to multinational companies are exceedingly welcome to Scotland. One of the striking things about Scottish industry since the end of the war has been the lack of enterprise among Scottish business men. It has been necessary to attract money from across the Atlantic for the new factories established in the central belt of Scotland. We are well aware that 7 million Americans are out of work, that another 4 million are on short time and that the situation is very serious in the United States. With one out of every 10 workers in manufacturing industries in Scotland employed by American companies, that is cause for great concern. I therefore very much welcome the interest which the NEB will be taking in multinational companies.
My right hon. Friend the Minister did not say very much about the liaison between the NEB and the Manpower Services Commission. He spoke about Government forecasts being available to firms, but manpower is one subject where forecasting has been notoriously unreliable. This problem is not confined to the United Kingdom. It plagues most Western European countries and even the United States. With investment, manpower planning will be one of the most crucial problems that Governments will have to deal with in the foreseeable future.
I come to the area of accountability of industry and the need to stimulate industrial democracy. In situations such as Lonrho, shareholders have a lot more in common with the shop floor workers than is generally realised. Sometimes shareholders do know a little more of the running of a company than do the workers. This makes what is happening in the board room and the values and the outlook of professional management all the more relevant.
Schedule 1 tells us more about who should not be on the NEB than it does about the sort of people the Minister should appoint. One thing which is plaguing this country is the plethora of academics, researchers and bureaucrats who are able to draw up all sorts of fancy plans for solving our problems. There is also insufficient involvement of the common sense which exists on the shop floor and of the experience and


professional expertise of management specialists. I do not see management specialists as enemies but rather as essential partners in the running of British industry.
I hope that the NEB will give us the opportunity to ensure that the right type of people are involved in taking key management decisions, that perhaps we shall get rid of the numerous people who tend to occupy board rooms on the basis of their birth and connections and not their abilities, foresight or management qualities. I issue a warning here against the NEB consisting of public directors who may be just as remote from the world of the work place and the management specialist and who flit about like butterflies from one board room to another.
The most important point of the Bill will be its attempt to try to bring new attitudes into British industry. I regret many of the arguments from Conservative Members this afternoon and particularly the comment by the hon. Member for Henley (Mr. Heseltine) that he will simply repeal the Act. Their approach does not bode well for the sort of constructive approach that British industry needs.

9.5 p.m.

Mr. Michael Marshall: I am glad that the Secretary of State for Industry has returned to the Chamber, because I would like, with no disrespect to the hon. Member for Glasgow, Mary-hill (Mr. Craigen) to revert to what he said in opening this important debate. Having been here virtually throughout the debate, I shall address myself to some of the previous contributions, many of which were very interesting. It is important to do so in order to see our way ahead.
If I understood the Secretary of State aright, he brought out three main areas of argument: first, the question of State investment; secondly, the dilemma of reconciling industrial efficiency, international competitiveness and the safeguarding of employment; thirdly, the whole question of the opportunities for State ownership, including investment in profitable manufacturing industry. Those are virtually the opening terms of the Bill.
I turn my attention to the means by which these objectives may be attained, and the basic dilemmas which they pose. When the Secretary of State talks about industrial efficiency, international competitiveness and safeguarding employment, he speaks with great fervour, and I am prepared to accept that he speaks with sincerity. But in the House, whatever he may say outside, we are entitled to a degree of sophistication in the argument. Surely he must see the difficulty in reconciling these objectives?
I do not suggest that there is anything insincere in the right hon. Gentleman's approach to the dilemma, but that it is a dilemma cannot be denied. I shall later illustrate how it works in practice.
The Secretary of State and other Labour Members must address themselves to the difficulties which we face as a result of the Bill. The hon. Member for Motherwell and Wishaw (Dr. Bray), in a thoughtful speech, struck the first constructive note from the Government side when he pointed to the fact that hon. Members should not expect too much from the Bill. In an indirect sense he was touching the nub of the argument.
I turn to the question how effective the Bill will be in practice. We are being asked to take a great deal on trust. I am prepared to say, as has been said many times, "Let us not look into the crystal ball when we can look at the book". The problems on the railways have been mentioned. My hon. Friend the Member for Henley (Mr. Heseltine) quoted Richard Marsh's words about how the railways had experienced great difficulty in making basic progress when their investment programmes had no more than six months' validity. Similarly, we remember only too well that State planning directed us on the disastrous course of backing cheap oil as the source of energy for the future and running down our coalmines, with all the difficulties that right hon. and hon. Gentlemen on both sides of the House have had to live with for many years.
I turn to the steel industry, with which I am most closely associated. The fact that I worked in that industry for 16 years, until nationalisation, gives me a great interest in its future and in seeing that it works effectively. What is the position of that industry today, almost eight years after nationalisation? The


first thing to be said about it is that in every possible way it meets all that the Secretary of State seeks to achieve in the Bill. I shall elaborate in more detail.
I am seeking to highlight the problems of Planning Agreements and the disclosure of information. I ask the Secretary of State to remember that the British Steel Corporation makes quarterly reports to the Department of Industry giving details of manpower, deliveries, financial information and a whole range of details with which the Bill is concerned. Similarly, the British Steel Corporation puts before the Department of Industry an annual operating plan which upgrades the same information over 12 months looking both to the current and the following years. Finally, it has a five-year plan with a roll-over arrangement which provides a long-term planning agreement. I have checked with the BSC and found that it takes the view that its present planning agreements are in every way compatible with what the right hon. Gentleman is seeking in the Bill.

Mr. Benn: I am paying great attention to the hon. Gentleman. Does he agree that, until we carried out the review of the closures, the one missing element was the involvement of workers in the steel industry in the planning of that industry? The hon. Gentleman is speaking of a planning agreement in the French sense of the programme contract which is between the Government and the boards of the corporation.

Mr. Marshall: I do not agree. I have also had the opportunity of talking to trade union leaders in the steel industry. The vital element which the Bill seems to ignore is the ability of trade union leaders to discover the information that they want and to use it with their usual skill in negotiations. The British Steel Corporation has an outstandingly good record of trying to reconcile the problems of redundancies and closures in discussions with the trade unions. There has been a great deal of co-operation in difficult circumstances in that area. I am not suggesting that the right hon. Gentleman is selling short any part of the steel industry. I think that the industry's record shows that consultation has been of a high order.

Mr. John Davies: Will my hon. Friend recall to the Secretary of State that, at the instance of the Government of which the right hon. Gentleman was formerly a member, union members appointed to individual boards in the steel industry were involved in the planning mechanism to which my hon. Friend is referring?

Mr. Marshall: I entirely agree with my right hon. Friend.
The British Steel Corporation is a good example of an industry which has substantial planning agreements and has shown an enlightened policy in those areas in which the Secretary of State takes a great interest.
Having said that, we have to ask: what is the situation today? It gives me no pleasure to look at the facts of life in the steel industry today and to observe that less steel is being produced than in pre-nationalisation days. In major areas of the operating divisions, such as Corby, there are out-of-work blast furnaces producing insufficient iron to meet the national need. It gives me no satisfaction to record that labour relations in the industry are worse now than at any time this century. Not one major plant under the control of the BSC is without a labour dispute. This is all part of the problem which has come from assuming that there is some miracle in State planning and assuming too much about the whole concept of nationalisation. It is summed up in one word—"interference".
I am delighted to see the hon. Member for Bassetlaw (Mr. Ashton) sitting behind the Secretary of State for Industry. In a strikingly vivid intervention some months ago, when talking of the problems of the steel industry, the hon. Gentleman highlighted Government interference as the main problem with which the industry had to contend. That is precisely my point.

Mr. Joseph Ashton: I do not remember that.

Mr. Marshall: The hon. Gentleman will find it if he refers to Hansard. I shall always remember him for that intervention. It was made with great style and panache, and it has firmly stuck in my mind.
If Government interference is the charge which is levelled time and again, in the operating sense, by the nationalised industries, this can hardly augur well for the Planning Agreements and disclosure of information clauses contained in the Bill.
I turn now to some of the basic questions to which I ask the Secretary of State to address his mind. The Bill is being rushed through with great speed. The issues raised are vast. They raise questions which will put tremendous constraints not only on the right hon. Gentleman but on many right hon. and hon. Members on both sides of the House. One has only to think of the situation which has come out of the steel industry, where the closure review forces every hon. Member with a steel constituency to fight for his corner. The Secretary of State intends to carry this over to the whole range of manufacturing industry. He is asking us to join him in carrying forward the fight which will go on whenever this closure argument arises. He is also asking us for a great act of faith that in this matter the civil servants will acquire an additional dimension which will enable them to overcome these difficulties of political as well as of industrial judgment.
I hope that I have made the argument that nationalisation is no cure-all, just as this Bill is no cure-all. Taking the nationalisation argument a stage further, it is to bring rationalisation, and rationalisation has meant redundancies, with the creation of a smaller number of larger units. All these are matters about which Government supporters have been worried and have spoken, yet the Bill will provide the means to spread this kind of problem further.
I turn to the timing of the Bill and to the cost of the exercise. The Secretary of State talks of 350 additional staff. I hope that that is right, though it is very hard to believe that, given the vast sections of the industry which could be affected by the Bill, that will be the case over many years to come.
I ask right hon. and hon. Members to think of the effect on the planning staffs and the headquarters administrations of many of the companies with whom Planning Agreements may be arranged. It is impossible to quantify at the moment, but

surely a little thought would convince us that this must have its impact.
The rôle of the trade unions seems to have been disregarded totally. The Bill seems to suggest that they are unable to hold their corner. I do not think that that is so.
In a sense, the Secretary of State has sold himself short. He has also sold this House short if he thinks that we can consider a Bill of this kind in the simplistic political manner that he has attempted today. He challenged us to come up with practical alternatives. I leave the House with two final thoughts.
I suggest to the Secretary of State that there is no reason why he should not use the 1972 Act effectively. The kind of rôle that I see is an in-and-out investment, in which the money available is released once it can be floated back in a share issue or the repayment of loan. That is a way of spreading the jam a little more usefully. In practical terms, £700 million does not look like a great deal of money, bearing in mind that it is about one-sixth of the British Steel Corporation's present investment programme. I do not believe that the Secretary of State will do anything like as much with that sum of money as he would if he had some flexibility rather than locking himself into an equity stake.
The way ahead would have been for the Secretary of State to tell the House that he intended to make the nationalised industries work effectively and profitably, with better labour relations and better productivity, and that this was the means that he intended to use to do it. If he had done that, he would have won a good deal of support from both sides of the House. Instead, he is caught in the trap of dogma, as has been shown by many speeches from Government supporters.

9.20 p.m.

Mr. Eric Moonman: This is a Bill worth fighting for. We must get it right. The fact that there have been a number of speeches from both Front Benches over the last few weeks overstating the point of the Bill has not helped. I can understand the Opposition being critical of the Bill, because it is their job to oppose, although I regret that the hon. Member for Bury St. Edmunds (Mr. Griffiths) said this weekend that the


Bill would put us on the road to a Soviet-style economy. It is perhaps even more difficult for me to appreciate—and in a sense I offer this as a plea to my right hon. Friend the Secretary of State—the dangers of over-stating the implications of the Bill.
Several hon. Members from both sides of the House, have spoken, in the reasonable way we have just heard from the hon. Member for Arundel (Mr. Marshall). They have raised points and comments that are worth listening to. Quite clearly we see some value in a Bill which puts right many of the things that have not been sufficiently effective in industry for many years, through various administrations. What would be wrong would be if we not only were highly critical of industrialists but at the same time set up aspirational levels among workers about what is likely to be in the Bill. This is probably the most worrying matter because it is so easy to get cheap cheers at any meeting. As politicians we are aware of this. We should not as politicians try to impress local Labour parties, or a wider sphere, and make them think that there is something here which will dramatically change the whole balance of power in the country.
It may well be that this is what some of my colleagues want. It is totally wrong, however, for any member of this party, especially Ministers, to give the impression that this is necessarily implicit in the Bill. I have gone through the Bill as carefully as anybody on this side of the House. I do not believe that we can make those assumptions. At worst it is dishonest. Therefore, we ought to look rather more closely at the practical application. Two things have not been referred to in the debate so far. Those of us who have sat here since four o'clock are entitled to make one or two observations.
The first concerns efficiency. That is a word of which we hear much less nowadays. Before the final vote tomorrow night there should be some reference to the fact that there is clearly a connection, which has not been specified so far, between the Bill's purpose of intervening in industry and its proclaimed aim of efficiency. I should like to know how Whitehall's new store of information will be usefully processed. How will the Government choose in which sectors to inter

vene? One evident answer is to start modestly in a few sectors which have identifiable problems.
The Neddy and the Little Neddies can point to some of these but not to adequate solutions. Neddies tend to work on the lowest common denominator principle. There is a better answer—the experience of Japan, which would be more difficult to sell. We would have to look hard, as the Japanese do, at the sectors offering greatest potential and to push and cajole investment into them. We could think of this in terms of the computer industry and the ways in which we might give greater support to rationalising that industry in Europe.
Who is to do the studying? Surely not just civil servants alone or any one group of specialist advisers brought into the Ministry. Obviously this is not the time or place to spell out such choices, but it is a sorry comment on British economic practice that the public and those who run industry can legitimately ask, even with last summer's famous White Paper at hand, whether the choices have been seriously thought about and whether the infrastructure necessary for making them is being prepared.
The second reason for encouraging efficiency, which must continue to dominate our thoughts in terms of the Bill, is the whole question of consent. This will be needed if plants are to close, if capital-intensive processes are to be put into effect, if retraining and labour mobility are to be accepted as the norm, as they must be in a nation that wants to advance. Consent can surely be eased along and, at certain moments, can be bought.
I would like to ask more questions. What evidence is there that new jobs will replace old ones? Just how good is British retraining and why should the unions co-operate in this manner? The answers are not, and could not be, in the Bill but surely they should exist somewhere.
I turn to Planning Agreements. Surely the concept of those agreements is simple. I believe that the hon. Member for Henley (Mr. Heseltine) was wrong. As I understand the situation, Planning Agreements are still voluntary. He will recall the debate on this subject last July when some of us were concerned about the exact


meaning of Planning Agreements. At the end of that debate my hon. Friend the Minister of State, Department of Industry, specifically said that they were voluntary, and this has also been made clear by my right hon. Friend the Secretary of State for Industry. The hon. Member for Bury St. Edmunds (Mr. Griffiths) appears to disagree with that. I have expressed my concern about overstatements, and the hon. Gentleman must accept the position. If the Secretary of State for Industry says that such agreements are voluntary, until evidence is produced to the contrary this surely is the way in which the agreements will operate.

Mr. Eldon Griffiths: I shall report the hon. Gentleman's remarks to my hon. Friend the Member for Henley (Mr. Heseltine), but the disclosure of information which is at the heart of the Planning Agreement—information is what it is all about—is compulsory.

Mr. Moonman: I hope that the matter will be clarified in the Government's reply. If there is confusion about the matter, I hope that it will not be left in a state of ambiguity. I believe that there is great value in Planning Agreements—and that has been the view expressed by many Conservatives, although with some reservation. However, if the aim is to reach an understanding about investment intentions, employment levels, location of plant, and the proportion of export and finance required, those matters can only be enhanced by an understanding of the way in which decisions in industry are made.
What must trouble most people are the returns. We are told that the Government will provide detailed information in return for Planning Agreements. What information will the Government give in these circumstances? What information do they intend to give which they are not able to give at present? I suppose that the short answer is that by having company information and by disseminating it, the Government will be in a better position to return it. We should know more about the basis of the return of information. It is not to be done simply to satisfy the curiosity of parliamentarians. I want to feel that we are asking Ministers the same questions which are being put to us by

management. The job is a tough one and people want to know how the system will develop. This matter cannot wait until the Committee stage, and I hope that we shall not have to wait for leaks in the Press. The question of providing information is fairly critical.
It has been said by some of my hon. Friends that whatever we decide in approving this Bill—and I hope that, despite the Liberals and the SNP, the Bill will go through tomorrow—the European Economic Community provisions will make the task much more difficult. I know of no evidence for that view. I know that one can take a certain view about the Common Market, but I hope that no prejudice—and I hope that the Minister will not encourage this—will enter into a serious debate on industry.
If there are inhibitions on a country's running of its own industrial policy, perhaps we should have evidence of that practice in France, or Germany or Italy. I know of no evidence to show that the industrial programme or policy of any one of those Governments has been inhibited by membership of the EEC. Those who subscribe to that view should be a little more careful and should give evidence to that effect. We may on occasion want to debate the Common Market, but that subject has no place in a debate as complex as the present one.
We should look at one or two of the experiences which have been mentioned. Reference has been made to the circumstances in Italy and France. There are real doubts about the Italian experience, and I regret this. Many of us have admired the way in which the IRI has operated and has been used as a holding company. I think that we should recognise that within the last two or three years it has got into difficulties, but it is hoped that this is a temporary phase. I would want to know whether the Minister has been able to look at the problems associated with the breakdown of IRI and whether he is aware of some of the experiences in France have have been pointed out. The important thing about the French experience is that it points out clearly that an industrial firm is not a political society, and that management does not begin with elections. Therefore, we come back to this point about concept. The way in which decisions are


made within an industrial environment depends on consent and negotiation.
In the same context, however much one wants to see an increase in worker participation, which is also implicit in this Bill, surely no one who has spent any time in a supervisory and managerial rôle in industry will deny the fact that there comes a time when participation has to stop and decision making begin.
Therefore, we ought to recognise two features of the Bill. These are my final points. First, those aspects of the Bill which I think are particularly relevant refer to the change relating to foreign take-overs of British industry. There is no doubt that a transfer of assets which is felt to be contrary to the national interest will be stopped by the Government vesting order. The other point—which is perhaps not strong enough—concerns the NEB, which can extend public ownership into profitable areas of manufacturing. I think that it is absolutely correct. What surprises me is why it should be only the industries which are run down or neglected that are to be absorbed into public ownership.
I repeat my reference to the computer industry. We must look at these industries, which should be in the public sector—what I would term "industries of innovation", industries that have a future, rather than constantly looking back to industries that need to be helped out and straightened out. Not only do we need to get our costs right and our industrial planning in balance, but Planning Agreements and worker participation must be relevant and meaningful, and not merely sign language. We ought, therefore, to examine and understand the intelligent expansion needs of the various worker levels.
Reference has been made in the Press to these problems only within the last two or three days. Hon. Members from Scotland will appreciate the difficulties of the Scottish Daily News, because it is quite clear, in this particular example—an industry which affects my union, the printers—that aspirational levels have been set up because of the hope of Government support and investment, to see the revival of an important newspaper in Scotland. Because there has been some difficulty in getting the money, the

result over the weekend has been a great frustration.
I think that part of the difficulty here is that when Government appear to be involved, to be interested in bailing out or supporting a company, it raises the levels of aspiration. We need to make quite clear, when engaging in support, the problems, the difficulties and perhaps the fact that a Government also have to withdraw. I do not wish to take up the time of the House in this debate on the particular frustration felt by my members in Scotland at present, because they have gone through a period over the last two or three weeks where at one stage their jobs appeared to be secure and they were putting their redundancy pay into the project. At the moment they feel let down and frustrated.
If we are to get the Bill right we need to refine it, and to be honest on this side of the House. Where we can improve it, we will do so. This does not conflict with our own Socialist ideal, which is to see the Bill on the statute book.

9.35 p.m.

Mr. George Gardiner: It is with some pleasure that I follow the speech of the hon. Member for Basildon (Mr. Moonman), as there were sections of it with which I found myself in considerable agreement. He raised a number of questions to which Ministers so far seemed to have closed their eyes. I hope that they will now address themselves to answering them. I should like to underline the hon. Gentleman's warning of the danger of increasing too greatly workers' expectations of what they are likely to get out of the Bill.
There are distinct parts to the Bill which would each merit serious discussion in their own right—the proposals for a National Enterprise Board, for Planning Agreements and for the compulsory disclosure of information. We could have a serious discussion over the proper rôle for a State holding company and over the limits or encouragement which should be given to it, and, indeed, of the high degree to which the one proposed here is made subject to ministerial dictation.
In fact, this NEB has come some way from the original proposal that it should take over some 25 of Britain's top 100


manufacturing companies. As previous speakers have pointed out, it certainly does not have the resources at its disposal to do anything like this. From this, I fear that the NEB is much more likely to interest itself, in the first instance, in acquiring a number of small and medium-sized firms. There is nothing in the Bill limiting its operations to the giants. Medium-sized and small firms with growth potential must be warned that the beady eyes of the NEB will be on them, particularly if the acquisition of two or three competitors would give it a dominant position in one subsector of industry.
Let us face it—the NEB will fairly early want to have some success stories to its credit, and it will go out to get them, even though the growth firms it acquires would probably have succeeded anyway.
Again, we could have a serious discussion about Planning Agreements and whether these might not be more useful if employed for indicative planning, along French lines. But on Planning Agreements the Bill is so vague as to be utterly meaningless. We have to refer back to the White Paper to see how the kind proposed here are intended to operate.
We could also have serious discussion again over the compulsory disclosure of information. There is, after all, a lot to be said for making more information on the activities and problems of a company available to its workers.
Each of these three proposals, if presented separately, could give rise to very sensible discussion. But the Bill draws them together for a clearly declared Socialist purpose, and much of the threat posed by the Bill to free enterprise and to the healthy working of our economy lies in the undefined relationship between the three and the extent to which each one can and will be used to buttress and strengthen the grip of the others.
The NEB, the proposed Planning Agreements and the compulsory disclosure of information together constitute an all-embracing web of State power in which any high flyer in British industry will quickly find his wings entangled before he is devoured.
I repeat: much of the threat posed by by the Bill lies in the undefined relation

ship between the three pieces of control machinery in it. I suspect that it is the Planning Agreements which will turn out to be the main instrument of the Secretary of State's grand design. From reading the Bill one might imagine that they will be nothing more than a further limb of regional development policy. It is from the White Paper that we learn that they will give the Government power over companies' investment, prices and employment policies, and—perhaps more significant—product development. There will be no statutory requirement on a company to conclude a Planning Agreement, we have been told; but there is a great deal of scope here for arm-twisting.
Under the Bill it will be perfectly possible for a threat of take-over by the NEB to be used to "persuade" a company to conclude a Planning Agreement. Under the Bill it will be possible for a Planning Agreement to contain an understanding that certain contracts be placed with NEB companies. Under the Bill it will be possible through Planning Agreement control over product developments to curb competition with an NEB company. Under the Bill it will be possible to make the placing of a Government contract conditional upon a Planning Agreement being concluded with it.
Under this Bill, it will be possible for the weapon of compulsory disclosure of information to be used against firms competing with NEB companies. Under this Bill, it will be possible for a company concluding a Planning Agreement to be given a market advantage over competitors which do not. All these inter-related pressures on companies are possible under the Bill as it stands before us, without any proper parliamentary process to check them.
Doubtless the Secretary of State will tell us that he has no intention of proceeding in some of the ways I have indicated, and if he does not say so the Prime Minister probably will. All right, let him prove it—first, by giving Parliament a greater check on these processes, as my hon. Friend suggested earlier today and, secondly, by adding three new schedules to the Bill in Committee.
Let each of the schedules set out a code of practice—the first governing ministerial directives to the NEB, the second governing the operation of Planning Agreements, and the third specifying


the circumstances in which disclosures of information will be ordered. I believe that without some clear codes of practice added to it the Bill will grant to Ministers a licence for the exercise of arbitrary power of truly Orwellian proportions.
Let me draw attention to just one effect of this. Ministers will seek to justify this concentration of economic power in the hands of the State as being at the expense of capitalists and shareholders, but what worries me is that the vast increase in the economic power of the State proposed in the Bill will most certainly be at the expense of consumers.
We all know how our present mixed market economy works. The wishes and the choices of us all, as consumers, are reflected through the market mechanism, albeit blunted somewhat by the machinery of price controls and some other mechanisms, and those producers who respond generally make a profit, while those who do not fall behind or make way for others.
Again, in locating new plant, companies are sensibly steered towards the development areas by the IDC system and in inducements in the form of grants and tax benefits. Thus, though we do not have anything like a laissez-faire economy, it is, nevertheless, still one in which consumer choice prevails. But this Bill is totally destructive of this system. It provides for ministerial directives to override commercial judgment over large sections of the economy, and for political convenience to take precedence over the wishes of consumers collectively expressed.
One Socialist Member argued a little while ago that the NEB might be called upon to make a social judgment against, for example, the production of toothpaste. If we consumers want to clean our teeth and to buy the toothpaste, who is the NEB to decree that we cannot? There is plenty in the Bill about "industrial efficiency", about "maintaining employment" and "national needs and objectives"—but nowhere do the words "consumer" or "consumer interests" appear.
Ministers speak as if their judgments in these affairs were inspired by some godly and selfless perception not available to ordinary industrial and commercial mortals, but what happens when the

political pressure is on them? What happens when a change in consumer taste threatens to close a factory in a politically sensitive area? What happens when a powerful union puts on the pressure to resist change? Will the Secretary of State's directives then be inspired by a lofty judgment of national needs, or by downright political expediency? Our experience over Kirkby is not very encouraging.
Even the present nationalised industries have their consumer consultative councils, imperfect though they may be. There is no provision in the Bill for a consumer voice to be heard over those sectors of the economy controlled by the Government jointly through the NEB or Planning Agreements.
The case for a freely operating mixed market economy was well presented by the CBI in its recent report, which said:
A market economy is the economic aspect of political democracy. But instead of offering a blanket choice once every few years between two or three alternatives, it provides a daily—even an hourly—referendum. Customers vote with their purchases, and every vote counts. Changes in taste or attitude are signalled by the cash registers, and producers adjust their plans to meet them.
That is what economic freedom means in a mixed market economy. It is this freedom of choice for us as consumers that the Bill attacks root and branch, superimposing upon our collective judgment the political dictates of a Minister or a Cabinet committee.
By such political directives on investment, prices policy and product developments, will the consumers' power be usurped. It is in defence of the consumers' freedom to choose that I shall vote against this Bill.

9.46 p.m.

Mrs. Audrey Wise: The Opposition have emphasised the need for parliamentary power and responsibility. That is why I make no apology for referring once again to the area in which we have lost our Parliamentary responsibility and power, a matter which is relevant to the Bill. I refer to our membership of the Common Market.
My hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo) explained that the Secretary of State might come to the House with proposals


which were then rejected, but because he was supported by the Commission in Brussels the wishes of this House could be overridden. That was strictly factual. He did not say that those wishes would be overridden; he said that they could be overridden. We do not pretend to be psychic. We are not looking into our crystal balls and saying that this will happen; we merely say that it could happen. It is more likely that the Secretary of State will come to the House with proposals, to which the House will agree, but which may be overridden by the Commission in Brussels despite the united views of the Government and Parliament. That is possible under the Treaty of Rome. I remind the Opposition that we have no power of veto on industrial and regional policies. If the Opposition's concern with the powers and responsibilities of the House is genuine, they should look to their attitude on our membership of the Common Market. I am irresistibly reminded of the bureaucratic and centralised nature of the Common Market. As regards the remarks of the hon. Member for Perth and East Perthshire (Mr. Crawford) about centralisation and the place of Scotland, I was puzzled by the implication that the phrase "part of the United Kingdom" somehow excluded Scotland. I should have thought that the hon. Gentleman could have had sufficient confidence in the Government to accept that "Scotland" is implied in the words "part of the United Kingdom". Would not the hon. Gentleman like to turn his mind to the real centralisation facing us today—the fact that 20 large companies employ over 2 million people? Does not he think that Scottish workers, no less than English and Welsh workers, will welcome the provisions of the Bill for real devolution and the decentralisation of the power exclusively to hold and use information? If the hon. Member consults Scottish workers he will find that they are interested in that.

Mr. Crawford: Scottish and Welsh workers would prefer Scottish and Welsh-based development agencies to a London-based NEB.

Mrs. Wise: As the hon. Gentleman knows, they will have exactly such agencies.
It will be interesting, when reading Hansard tomorrow, to look at the roll call of places represented by Opposition speakers today. We shall not find that they come from the industrial heartlands. For instance, the hon. Member for Reigate (Mr. Gardiner) expressed great concern for consumers. I share that concern. So do workers. Workers are themselves consumers—and they are better consumers if the Secretary of State manages to save their jobs.
A document composed by 300 senior shop stewards of British Leyland expresses the workers' concern for consumers. The document states:
Spares supply is paramount to maintaining our customers' cars and other vehicles. If we want to retain our customers there is … no good reason why any of them should have cause for complaint, but they have. We have no coherent policy it would appear, for conducting this most important and possibly most profitable section of our business. Spares should be an integral part of our component production schedules. The Company will state that this is the case, but it is not so, and more often than not spares are only considered important when the Track System is laid off or when we are confronted with short-time working.
Those workers are showing a concern for consumers and pointing out management errors which they have no possible channel for correcting. The question of spares has also arisen in the case of Meriden, with motor cycles. It arises frequently. I am not singling out British Leyland as a culprit.
Workers are not responsible for this kind of fault, nor for built-in obsolescence, which is another characteristic of our great consumer society. Workers are not responsible for the fact that often they are supplied by management with inferior tools. Last week some constituents complained to me that when they point this out they are told that the provision of tools is a management prerogative and that they—the workers—must mind their own business.

Mr. George Gardiner: The hon. Lady chides me for representing a South-Eastern seat. At a previous General Election I had the pleasure of fighting the territory which she now represents. Would she use her good influence over her shop stewards to ensure that their undoubtedly high regard for consumer interests is reflected in a somewhat greater


concern and respect for maintaining delivery dates?

Mrs. Wise: As I have said, at present workers are not allowed any share in management, and delivery dates are a management prerogative. If the hon. Gentleman has in mind the question of interruption of production through strike action, I shall put him in the picture with regard to the workers at Chrysler—another section of workers in Coventry which has been told by the management that it worked so well during the three-day working week and that there were so few interruption of production—those were the opinions of the management—during the past summer that the firm's cars have been overstocked. That has contributed to the fact that they are now on a two- or three-day week.
We have heard a lot about confidence to invest. I suggest that if our industrial future depends upon people who lose confidence so readily and who are such fragile flowers we shall be doing them a great service if we take from their shoulders the undoubted strain of making investment decisions. I suggest that it is not acceptable that the future of workers and the future of the nation should depend on a multitude of irresponsible and unaccountable investment decisions. If, as I believe it does, the Bill helps to get a more rational approach into the area of investment it will have done all of us a great service.
I am extremely surprised that the robust guardians of British capitalism are now so reluctant to carry out their function of taking risks to reap great rewards. They seem nowadays to want the rewards without the risk. That is not acceptable to us.
Workers have a lot of power but at the moment it is a negative power. They have the power to stop things running but they do not have the power to run things in the interests of the ordinary people. I believe that it is the sharing of power through the disclosure of information and through the Planning Agreement system which will help to harness the talent and energy which now run to waste in British working people.
I was sad to notice that when my right hon. Friend the Secretary of State referred to ideas the Opposition hon. Members as one man burst into hearty laughter. I do

not believe that the British people share their contempt for ideas. One of the most valuable assets of the Bill is that it will encourage and enable British working people to take an intelligent interest in their own work, in what it is, why it is done and what happens to it. Our working people will have the greatest possible incentive to achieve efficiency.
Unfortunately my hon. Friend the Member for Basildon (Mr. Moonman) is not here now, but I noticed his remark to the effect that anyone in a managerial positions knows that there is a time when participation has to stop and decision making has to begin. I must tell my hon. Friend that anyone who has not had a managerial position but who has worked solidly day after day in industry knows that many rubbishy decisions are taken and that a great deal of inefficiency has existed which we have had no chance of altering. I suggest to my hon. Friend that when some of us talk about participation we mean participation in decision making and not some sort of phoney consultation.
We have heard a great deal about the lack of confidence which British industry has in the Secretary of State for Industry and in the Bill. I remind Conservative Members that workers in British industry are coming to the House in their hundreds to express their confidence in the Secretary of State for Industry and in the Bill. I heartily commend it, and I have no doubt that it will gets its Second Reading tomorrow evening.

It being Ten o'clock, the debate stood adjourned.

Ordered,
That the Industry Bill may be proceeded with at this day's sitting, though opposed, until Eleven o'clock.—[Mr. Thomas Cox.]

Question again proposed, That the Bill be now read a Second time.

10.1 p.m.

Mr. John Stanley: I assure the hon. Lady the Member for Coventry, South-West (Mrs. Wise) that there is an industrial heartland in the South-East and part of it is the paper industry in my constituency. I therefore hope that she will not feel tempted to use labels about so-called non-industrialisation in the South-East.
I should like to take up the views of the Secretary of State about the villains responsible for the performance of manufacturing industry. He made an interesting statement in the Investors' Chronicle of 6th December, and he said much the same today. He stated:
I have never taken the view that what is wrong is that there are a lot of villains about who have in some personal and special way failed the nation".
I find it hard to believe that that is his view, because everything he has said prior to and during this debate—and it has been echoed by hon. Members opposite—indicates that the Labour Party believes that one villain essentially is responsible for the so-called failings of industry in the last 10 or 20 years, namely, management, and management confined to the private sector.
It is wholly wrong to lay all the blame for our industrial performance at the door of private management. The fallacy of the Bill is that it is based on an attempt to solve our industrial problems on a far too simple diagnosis. I do not believe that management basically is particularly bad. Much of it—and here I declare an interest in a manufacturing company—is highly skilled and the quality of line management is as good as that in most other Western European countries. There is a need for some spring cleaning in certain board rooms. There is certainly need for more training among middle-aged managers. But one cannot lay the blame for our industrial performance entirely at the door of management in private industry.
As my hon. Friend the Member for Henley (Mr. Heseltine) said, we must look more widely in our diagnosis and consider what other villains of the piece there may be. We must consider the performances of successive Governments and particularly the lack of stability over many years in the rate of expansion of the economy. The gyrations in our economic performance—fluctuations in demand, fluctuations in sums released to companies through investment incentives, and taxation—have presented companies with a veritable quicksand on which they have had to try to go forward.
We must consider the question of the tax burden put on companies. It is all very well for hon. Members opposite to condemn companies' investment performance,

but investment must be paid for. If, as a result of taxation, companies' cash flow and liquidity positions are not sufficiently strong, we cannot expect a thriving level of investment. It is no surprise that countries with a commendable investment performance, such as Japan and Germany, have a lower rate of taxation on company profits than the rate in this country.
It is as well to consider the Government Departments responsible for the administration of industrial policy. We lose out in this country because we have failed to produce a system under which there is ready interchange between the Civil Service and manufacturing industry. We have lost out considerably compared with countries such as France, where there is such an interchange, by not having sufficient people who have gone from public administration into private or public industry and then returned.
This is another major area for improvement. It is unreasonable to say that no blame can be attached to the performance of the unions, to the multiplicity of unions, to the demarcation problems to which this has given rise, and to the endless restrictive practices which are found in many sectors of manufacturing industry. That aspect of industry needs to be examined as closely as any.
The Government have put forward two solutions to our industrial problems—the extension of public ownership and the extension of union power—not employees' power—through the instrument of disclosure. If the Government study the facts they will see that there is no evidence that publicly owned industry will operate more efficiently than private industry, and that is the ultimate criterion whether we shall succeed as a nation. On every comparative financial criterion, public industry has not succeeded as well as private industry, whether it be rate of return, assets, output, self-financed increases in capital or taxation paid. On all these yardsticks the public sector has lagged well behind. There are striking figures for the period 1962 to 1972 which show that nationalised industries paid a total of £81 million in tax compared with £13,700 million paid by private industry.
Whatever the relative financial merits or otherwise of the public or the private sectors, it is a fallacy to suggest that it


will be possible to solve our economic problems by extending the public sector. The moment a company is nationalised, efficiency suffers, because the public company operates in a different environment. The management of a privately-owned firm knows that in the last resort it will be dependent upon its company's financial resources. The public company knows that in the last resort it can fall back on to the taxpayers' bottomless purse.
I do not believe that the disclosure provisions will solve the problems of industrial democracy. I hope that the Secretary of State will not persist in suggesting that these provisions are in some way novel. Many companies already do what is suggested in the Bill. It is not breaking new ground for a company which is about to declare redundancies or to begin new manufacturing operations to consult the unions and the workers. The best companies do so, although I wish that many more firms would follow their example.
The Secretary of State has totally failed to recognise that there is a balance to be struck on disclosure. It is clearly not in the interests of employees for them to be kept in the dark about management intentions. Equally it is not in their interests that the performance of the company should be so publicly exposed as to threaten the company's competitiveness and viability. There is no sign that the necessary balance has been struck in the Bill.
What possible justification is there for limiting disclosure simply to the union representatives? This has been described as an exercise in industrial democracy, but democracy is not selective. Democracy means one man one vote, and treating everyone equally. Why should some employees be treated more equally than others? The Government's proposal seems a negation of democracy if members of unions are to have the rights which are denied to other employees.
Secondly, in the matter of disclosure there is no case for not treating shareholders on the same footing as those employed in the company. After all, they have risked their savings and investments in it. I believe, on the reading of the Bill so far, that the Secretary of State has opened up a mare's nest under the Companies Acts in the obligation he is

putting on directors to disclose information to union representatives.
Thirdly, why has the right hon. Gentleman not provided a better defence against the disclosure provisions undermining a company's competitiveness? For example, there are no sanctions or inhibitions on the onward disclosure of commercially important information by the trade union representatives. Companies have no right of recourse to the courts of appeal from the appellate committee being set up by the Secretary of State. But the committee is the Secretary of State's creature. He lays down its terms of reference and prescribes its membership. There is a fundamental case for decisions of the committee going to an independent judicial body—in other words, for a right of appeal to the courts.
The Secretary of State sees the Bill leading to the regeneration of British industry and making industry more democratic. I share his aspirations and objectives, but I predict that the two certain results of the Bill are that it will channel huge sums of public money into the least efficient firms, those unable to survive without going to the NEB, and that it will add immeasurably to the power of trade union negotiators in forcing through wages claims that will ultimately work against the true interests of their members.

10.12 p.m.

Mr. J. W. Rooker: As the first Member for Britain's largest industrial city to speak in the debate, I give the Bill a warm welcome. I have listened to every speech and have found it incredible that Conservative Members represent the party that took various powers to itself when in Government. There is not time to go into the background, but it is worth listing some of those powers. They include power to nationalise, power to support industry, power of investment, power over prices, power to demand information, ministerial power to amend statutes, power over large companies, power over profits, power to vet investment plans, power over multinational companies, power of entry and seizure of company books, power over mergers, power to veto directors, power to inspect the books, power to issue directives and power to define unfair industrial


practices. We never saw the Conservatives use that last power to define asset stripping as an unfair industrial practice. They also took power to appoint commissioners when they thought it useful to do so. Those powers were taken by the Conservative Government between June 1970 and February 1974.
What we have done in the Bill is to mould most of those powers into a single measure that will be to the betterment of democracy. More and more people now realise that basic control over the economy lies at the door of central Govement and not of separate, individual companies. I am pleased to see that we are taking the legislation to bring that into effect.
The CBI warns that the Bill is a charter for workers' control. That is its greatest fear. We have not heard too much today from the spokesmen of the CBI about the death of the private sector or the effects on competition and the place of the shareholder. Much has been said about the disclosure of information, because hon. Members opposite realise that that is the nub of the Bill. The Bill will not be mainly used by Labour Members or Labour Ministers. It will be used most by the trade union movement. We make no apology for that. There is nothing to hide.
It is worth recalling the report in The Times last Friday about the Prime Minister's discussion with the CBI. My right hon. Friend seemed to be saying that a White Paper had precedence over a Bill and that he would have to look at the things which were different.
I have been a Member of this House for less than 12 months, but I have learned that White Papers—this one was never debated or voted upon—have not as much force as a Bill when enacted. The Prime Minister has put out a red herring.
As I see it, the Prime Minister is the father of the Bill. No doubt he will not wish to be reminded of that, but it is useful to look back to what he said. I have done this before in debates in this House.
On 17th March 1973 my right hon. Friend called for disclosure of manpower and labour costs and ownership and control of companies' projected work loads, pricing policies, development, production and investment data. I give the Prime Minister ten out of ten for that.
Whatever may be said about the Prime Minister gettting my right hon. Friend the Secretary of State for Industry in his sights, putting pressure on him, or whatever he may say in Cabinet meetings, I suggest that the power behind the Bill is Prime Ministerial authority. We have seen what can be done with Prime Ministerial authority by the former Prime Minister, the right hon. Member for Sidcup (Mr. Heath).
I turn to membership of the NEB, because that is important. I do not want the NEB to be saddled with people whom I should describe as spent forces, whether they be former politicians, trade union leaders or industrial managers. There are too many of these people from all sections littered about on public boards. I have an assurance in a parliamentary Answer, for what it is worth, that those appointed to the NEB will have not only experience but future potential to make a valid contribution. I shall watch closely the first appointment, which will probably be made after Second Reading.
I hope that the hand of Lord Goodman will not be behind the appointments. If what we read in the Crossman diaries is anything to go by, bearing in mind his suggestion for getting our housing drive under way, we would end up with the Jim Slaters, Metcalfes and John Bentleys of this world on the NEB. That is the last thing that I want to see.
Lastly, I turn to the Planning Agreements. Many companies will think that they are not covered by the Planning Agreements because of their structure and the markets in which they are in direct competition with offshoots of large companies.
I will give an example from my experience. One hat that I wore was that of production manager for a loudspeaker manufacturer. It was a small company with £3 million a year turnover. [Laughter.] Hon. Gentleman may laugh, but I have worked on both sides of industry and have a valid contribution to make.

Mr. Mikardo: Stop laughing, you nitwits.

Mr. Rooker: That company had a turnover of about £3 million a year and employed about 600 people. It had a 40 per cent. share of the market. It was in a


monopoly situation. Its chief competitor also had about 40 per cent. of the market. That competitor was part of a multinational £100 million a year company. We operated in direct competition with that offshoot. It was crucial that the forces operated equally on both companies.
But under the system which I see developing the large company may be brought into a Planning Agreement arrangement for all the offshoots and conglomerates that it controls and may get an unfair benefit which the small company may not get. Therefore, consideration must be given to the market and the product of the companies concerned as well as to turnover. It is crucial that if we

have an independent company with a pretty big share of an albeit small market which is not part of a larger outfit, it should not suffer due to lack of Planning Agreements. The small companies are very useful for their acceptance of innovation and their preparedness to give young people with shop-floor experience other types of experience. I am the last to say that companies of that kind should be treated unfairly simply because they are small.
I cut short my speech at that point, because I hope to serve on the Standing Committee, where I shall be able to pursue ways in which I think that the Bill is weak and requires strengthening.

10.20 p.m.

Mr. David Crouch: I am glad to be called immediately after the hon. Member for Birmingham, Perry Barr (Mr. Rooker), because I want to assure him that I did not laugh at him when he said that at one time he had made loud speakers and been in a monopoly position. But I can understand the humour in being thought to be a loud speaker in this place. Like the hon. Member for Bethnal Green and Bow (Mr. Mikardo), we all sometimes have to try to be loud speakers. But I appreciate that the hon. Member for Perry Barr was seeking to make the point that he had been in management but that he was speaking today in support of the Bill and of his right hon. Friend the Prime Minister. I must warn him that he may find it difficult in future to follow every move of the Prime Minister, but we wish him well in that endeavour.
In this debate, my heart went out to the hon. Member for Coventry, South-West (Mrs. Wise). I have listened to her on a number of occasions doing what I have tried to do in the past, which is to make some recommendation to her Front Bench. Today, the hon. Lady supported her Front Bench to the hilt. But I have heard her making recommendations, and at times in the past when looking at her Front Bench she has had her hand firmly on her gun. The hon. Lady has spirit, and she demonstrated it today when she commended this Bill to the House. It is a Bill which I do not support, but I hope that both the hon. Lady and the hon. Member for Perry Barr will be members of the Standing Committee, will make their contributions to the Committee's debates, and will listen to the arguments put forward from both sides.
The hon. Member for Coventry, South-West pointed to the empty place from which the hon. Member for Basildon (Mr. Moonman) spoke earlier. The hon. Gentleman said that we would need to refine the Bill. Many in this House and many people outside it hope that the Bill will be refined before it reaches the statute book. I can promise the House that it will be more than refined. We need to produce out of it a measure which will be useful to the community, to society and to industry as a whole, both management and trade unions, if

we are to help the country forward. In its present form, the Bill will not do this. It will not help industry. Unless it is refined, we shall not have that dimension in it which will make it a piece of constructive legislation.
I was on holiday last August when the White Paper entitled "The Regeneration of British Industry" was published. I had to take time off my holiday to study it. I cannot say that it made very pleasant holiday reading, and I recognise that many of those who support the Government did not find it good reading. It was not what they wanted to hear. However, as we have heard today, many hon. Members and many other people outside this House, both in the trade unions and in management, support the Bill. To them, it is a glimpse of the promised land—a Socialist State in Britain at last.
The Secretary of State has said that this is just a beginning. The right hon. Gentleman was howled down today. He showed us a low profile. We must admire the way he handles the House when he has something difficult to present. He showed very little of himself or what was in the Bill. Today he said he thought that Britain had come to the end of a chapter of our industrial history. This is surely a warning to us that there is a sincerity in the right hon. Gentleman, reflected by so many of his supporters inside and outside of this House. They believe that this Bill will bring about the rejuvenation of British industry, will be a take-off point and will provide an opportunity for further investment and expansion and for a democratisation of industry.
There are many active Labour thinkers who believe that capitalism and the free enterprise system has had it and has failed the nation. In the words of the hon. Member for Bedwellty (Mr. Kinnock) on 4th November:
the time has come, in the view of … a large proportion of the British Labour movement, for the private enterprise system to give way to one that is to a far greater extent in public hands."—[Official Report, 4th November 1974; Vol. 880, c. 769.]
The right hon. Gentleman and his supporters have not tried to pull the wool over our eyes. The intention behind this major Bill has been clear. This is probably one of the most important


pieces of legislation to appear in this House since the war. It certainly cannot assume a significance in this Parliament any less than that of the Finance Bill.
Not all of the Secretary of State's colleagues share his view on Government ownership and control of industry and believe such to be in the best interests of society. The Paymaster-General has strong reservations on this and has courageously tried to dissuade his party from creating the National Enterprise Board, which could become, as he said, the most powerful body in the country. He said it could become
more powerful within its field of activity than the elected Government".
He was writing a year before the White Paper was published. He went on to say that he felt that this institution would become so powerful that the Minister would not be able to control it, let alone Parliament. In fact, The Guardian chose to give his views the headline "Labour's Public Monster", referring to the National Enterprise Board.
The Paymaster-General is a staunch Socialist and I respect his views. But he is rightly concerned that the Government should not take a big step in this direction and create a body which, to all intents and purposes, would be outside the control of Parliament. Surely we must pause, if such a threat is being made, and consider the situation. Parliament must remain supreme. We dare not brush it aside—not even the most devoted admirers of the Bloomsbury and Hampstead breakfast set. The White Paper made some laudable statements. It spoke of the need for
a vigorous, alert, responsible and profitable private sector".
It also said:
Industry and the Government should also be partners in the pursuit of the objectives which spell success for industry and prosperity for this country.
There is nothing wrong in such thoughts. I welcome them. But I began to have my doubts when the White Paper went on to say that the Industry Bill would be a new initiative which would contribute to greater industrial efficiency and more and better investment and would raise the quality of management. My holiday went sour. I was in Devon on Dartmoor at the time. While I could

not suggest that the right hon. Gentleman should be sent to Dartmoor, I cannot help thinking that we should consider some other place for him, to set him aside from the dangerous position he is in today.
What is a Planning Agreement on a company basis? What does it mean? Does the Secretary of State suggest that his officials are equipped by experience in industry with a knowledge of production problems—which is possessed by many hon. Members on the Government benches—and an understanding of marketing and selling? Does he suggest that his officials could be competent in those disciplines, able to direct and instruct businessmen how to run their businesses? Does he imagine that he has civil servants today so well trained in management? Fulton did not think so a few years ago—as recently as 1968. Have things changed so fast in the knowledge of the Government Front Bench tonight that they believe that they have such men trained in management? It would be a historic moment if that is the situation in the Civil Service today, and if civil servants can take decisions better than the more experienced industrial managers.
There is nothing wrong in suggesting that the Department of Industry should have planning talks with industry. I am not against that, as the Minister of State knows. Of course they should be given information—but for the purpose of helping industry to succeed. There is a need for such sectional planning and co-ordination. It happens already in industry through the NEDC. Is that not enough? Is that not the right direction in which Government intervention should proceed? Should it not be intervention aimed to assist rather than merely to take control? Industry is willing to co-operate on that basis, and even ready to release confidential information providing that it can have absolute assurance that it will be treated as confidential.
In Sweden not only is there a body which is to all intents and purposes the Swedish National Enterprise Board, but Sweden has another similarity to Britain. I am sure that the Secretary of State has studied this. I have seen it for myself as a member of the Select Committee on Nationalised Industries which went there about two years ago to look


at this body. Sweden has today a programme of what is called general industrial planning. I want to quote from the Swedish budget statement which is published every year:
General industrial planning
aimed at creating
a better, more integrated basis for the far-reaching decisions that have to be made by firms and authorities alike.
Studies are made of individual branches of industry, such as iron and steel, textiles, petrochemicals and so on, by section. That is the correct way.
Surely that is the way in which the structural problems which face a nation should be studied. They are studied in Sweden in this way. I should have thought that the Secretary of State should have studied this to find some pattern of how authorities and the public and private sectors of industry and the Government can work together with their advisers to pursue a planned policy for the progress of a nation.
My concern is that the Bill is much worse than the White Paper. It is unashamed in the way it sets out to destroy the free enterprise system and to replace it not just with a Socialist system but with—this is what gives me great despair—a bureaucratic system. Parliament will not come into it, or will come into it hardly at all. The proposed NEB will give enormous scope to the Minister and the Cabinet, and Parliament will get only an annual report. What can Parliament do at the end of a year, when these decisions have already been taken? Can Parliament refer them to the Public Accounts Committee and say "Look into this matter and tell us what went wrong last year, or the year before that"? The NEB will be much more powerful than any nationalised industry today, and we have precious little control over these industries now.
Some will argue that it is the Minister who will be responsible and that he and the Government will be fully accountable to Parliament, but we must study the Bill. Look at the powers that it confers on the Secretary of State. I shall not go into them now because there is not time to do so. We have been given a catalogue of these powers. They are enormous, and it is extraordinary that the Secretary of State should come here,

blessed by the Prime Minister, and say that he wants to take these powers to spend hundreds of millions of pounds, and yet they are outside the authority and control of Parliament. That must be wrong, and we must take this up in the greatest detail and with the greatest concern in Committee.
The Bill gives the Minister powers which can only be described as powers for an industrial dictatorship of Britain. It is nothing less. It is no good the right hon. Gentleman making signs. I believe that The Guardian was right to say that the Government were creating a monster. If the Bill becomes law it is anyone's guess which will be worse—the Frankenstein of the National Enterprise Board, or the Dracula of the Secretary of State feeding off the body of British industry.
I do not commend the Bill. It cannot be refined, and I suggest to the House that we should throw it out.

10.36 p.m.

The Under-Secretary of State for Industry (Mr. Michael Meacher): I think we have had a fairly colourful and important debate, but one which in many respects ran true to form. The hon. Member for Henley (Mr. Heseltine) in opening the debate for the Opposition gave a characteristic display. He was warned by my right hon. Friend not to criticise the Bill without saying what he would do instead of it. He spoke at Gladstonian length, deploring stop-go, and deploring the politicians who deprive industry of security for the future. What was his solution? It was the instant stop-go that he had been criticising. His only answer was "repeal".
At least some of his hon. Friends were realistic enough to recognise that industry's problems require direct intervention in industry to be greatly expanded. I quote the words of one particular enthusiast:
Both on the regional and on the national score there is a need for the means of action. I mean to provide the means and to equip it with powers and resources to do the job. In a new and rapidly changing world industrial and commercial environment the Government cannot stand aside when situations arise which industry and financial institutions cannot meet alone.
Those are not the words of a social interventionist. I have quoted that impeccable source, the right hon. Member


for Knutsford (Mr. Davies), the former Tory Secretary of State for Trade and Industry. Yet despite the considerable increase in powers the fundamental problem of Britain remains unsolved. It has been widely agreed in the debate today that investment is the heartbeat of the economy.
The relative failure in this respect has been stunning. I shall not go over the ground which, in a rather sterile way, has been covered today about who or what is responsible for the decline in investment over the last few years. According to the OECD figures, for two decades to 1971, under both Governments, investment in manufacturing industry, at current prices, rose less than fourfold. In Germany it rose almost eightfold, in France about tenfold, and in Japan almost twenty-five fold.

Mr. Adam Butler: The hon. Gentleman referred to the discussion being sterile. I should have thought that this matter was at the heart of the debate, because our argument is that the Bill, and in particular the NEB, is not the way in which to bring about effective investment. If we can put a finger on why there has not been adequate investment in the past, we can find a solution. We believe that it is not in the Bill.

Mr. Meacher: The Conservative Party had an opportunity during its last period of Government to implement those proposals which it thought were necessary to increase investment. Without going over the ground again, it is not unfair to point out that, despite the increase in investment which came in 1972–73, still at the end of the Conservative period of office, investment in British manufacturing industry was, in real terms, 10 per cent. down on the level that it had reached in 1970. I do not say that in a spirit of acrimony. I know that the Conservative Government did their best to improve investment, but they did not succeed. That is the relevance of the Bill. Against that background it is only the prejudiced who will deny that a new dynmatic thrust is needed today in British manufacturing.
My hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo), in what I think will be widely agreed to be an excellent speech, was right when

he said that it was not the case that we should leave well alone and all would be all right. Private enterprise has, by any standards of objectivity, failed in several important respects. There is a need today, widely recognised even among management, for new techniques, which will resuscitate investment and achieve a break-through in the regions, where we have only held the line, to stimulate sluggish areas of the economy, to strengthen British interests against undesirable foreign takeovers in crucial areas of our economy, particularly at present, and to get British industry into the offshore supply business to feed the North Sea oil boom, where we have lost out in the last several years. Those are crucial aims.
Yet I think that there has been much ill-informed and misleading comment, which I shall not say was deliberate, from the Opposition about the extent of the powers to be conferred on the Secretary of State and on the NEB, and on the degree to which the Board and the Secretary of State will be answerable to Parliament.
The hon. Member for Henley, in a passage of rising hysteria, pretended that there were virtually no limits to the powers being conferred on the Secretary of State and on the NEB to acquire firms. That might well be an apt description of the situation in which both multinational and domestic conglomerates marauded their power through the industrial landscape, swallowing up small firms in an orgy of takeovers in 1971 and 1972, when the hon. Gentleman was in office.

Mr. Esmond Bulmer: Will the hon. Gentleman reflect on his own proposals for a capital transfer tax, which will have that effect?

Mr. Meacher: The capital transfer tax will have none of those effects. It will ensure that the wealth of the country is better distributed in a publicly accountable way, and not in the way in which the takeovers were made a few years ago. As a description of the NEB, the remarks of the hon. Member for Henley were a travesty of the truth.
The NEB will not have power to compel anyone to do anything. It will follow the normal commercial processes. When it acquires shareholdings it will


do so by agreement as the White Paper made clear from the outset. That is contrary to the impression repeatedly given by the Opposition. In establishing a base in profitable areas of manufacturing industry, as in all its activities, it will have to seek the Government's approval in every case where it plans to make an acquisition of more than £10 million-worth of equity, or, even more importantly, in every case where it plans to acquire 30 per cent. or more of the voting rights in the company.

Mr. Heseltine: I did not say what the hon. Member has attributed to me. However, will the hon. Gentleman deal with one point which I did make? I believe that the NEB has powers to make resisted takeover bids.

Mr. Meacher: I shall come to the question of compulsory acquisition. I intend to devote two or three minutes of my speech to that subject.
The Secretary of State's powers under Clause 6 to give specific directions to the Board have also been criticised, and equally wrongly. The use of its powers can be thoroughly probed in the House, which is considerably more than can be said of the activities of conglomerates over the past few years. It is more also than can be said of the Pay Board, which was set up under the last Conservative Government and the judgments of which were considerably more onerous on the individuals to whom they applied—but which was entirely outside parliamentary scrutiny.
The NEB will have to make annual reports on its activities and the Secretary of State will be obliged to lay them before Parliament. No doubt appropriate arrangements will be made in due course by the Select Committee on Nationalised Industries or other Committees to review the Board's activities, while the Public Accounts Committee will have its usual rôle in relation to the provision of the Board's finances.
Again, in the exercise of Sections 7 and 8 of the Industry Act 1972 the NEB will act only on the direction of the Secretary of State, who will set out the terms and conditions of the aid to be given. The Secretary of State's directions will be published and he will be accountable for

them and for the financial obligations he assumes in consequence.

Mr. Keith Stainton: Given the Secretary of State's powers, will this, therefore, expose the National Enterprise Board to the activities and scrutiny of the Parliamentary Commissioner for Administration?

Mr. Meacher: That is certainly a matter which should be brought out in Committee and, if the Committee is persuaded that such a course is desirable in the interests of accountability, we will take full account of the arguments.
The position of the Industrial Development Advisory Board will be just the same, and so will the need for parliamentary approval of assistance under Section 8 of amounts exceeding £5 million. It is by no means the intention that all Section 7 and 8 assistance will in future be given through the NEB. The Board will be used for assistance to larger companies and where the scale of the assistance is such that the Government will acquire a substantial proportion of the equity of the company concerned.

Mr. Tom King: The hon. Gentleman said that larger enterprises are likely to be committed through the NEB. Will he confirm that aid to British Leyland, if it is given, is likely to be given through NEB?

Mr. Meacher: We are still awaiting, as the hon. Gentleman well knows, the report of the Ryder Committee, and until we see the recommendations and they have been discussed within Government I cannot give the hon. Gentleman any indication of the manner in which the Government will proceed. The whole point about the NEB is that it is to be flexible and that there are many ways by which assistance can be given, and they will not necessarily all be centred through the NEB.

Mr. Heseltine: As the Secretary of State for Industry has already said that there is to be a public stake in British Leyland, what conceivable vehicle is there other than the NEB by which there could be a stake?

Mr. Meacher: I regret having given way to that intervention. I should have thought that the hon. Gentleman would


be aware that at least some parts of BLMC are in assisted areas, and there is no limit to the level of assistance that can be given under Section 7 of the 1972 Act.
Furthermore, contrary to misrepresentations by the Scottish National Party—I should like to give a little attention to this, in view of what the hon. Member for Perth and East Perthshire (Mr. Crawford) said—the NEB will not centralise regional industrial activities. It is not an overriding Bill in any sense. The Secretary of State's powers under Sections 7 and 8 will be transferred to the Secretary of State for Scotland on 1st July of this year and the NEB will work closely alongside both the Scottish Development Agency and the Welsh Development Agency. The idea that a Scottish Assembly could stop redundancy caused by a multinational at Honeywells or that Rolls-Royce at Hillington, Glasgow could be hived off from Rolls-Royce at Derby shows an ignorance of present industrial conditions which is damaging to the interests of Scottish workers.
I shall spell out a little more the relationship between the NEB and the Scottish Development Agency. The legislation to establish the Scottish Development Agency will provide for certain functions of the NEB to be performed independently by the SDA in Scotland. They will include the provision of investment capital for manufacturing industry, the establishment of new public enterprise, joint ventures with private industry and the provision of advice to private industry. The NEB will not exercise its function in Scotland except in relation to companies which span the border. In those cases a suitable concordat or specific contribution will regulate the activities of the NEB as regards the reorganisation of companies. The extension of public ownership into profitable manufacturing industry and the management of existing Government services—

Mr. Crawford: Is the Minister saying that the writ of the NEB shall not run in Scotland and that the SDA will be all powerful in Scotland?

Mr. Meacher: I have spelled out in great detail the exact way in which it will work. Instead of getting up to inter

vene, the hon. Gentleman should have listened.
On examination of the Bill I believe that it is undeniable that there is a strong and comprehensive framework of both public and parliamentary accountability. The CBI and Conservative Members who have made accusations of arbitrary powers should realise that the House will have more control over the activities of the NEB than shareholders have over the board of ICI and various other large private companies.
The hon. Member for Surrey, North-West (Mr. Grylls), who I regret seems to have left the Chamber, criticised the one instance permitted of compulsory acquisition. I hope that the hon. Member for Henley will listen to this as he sought to raise the same point. There is power to enable the Government to prevent the loss to unacceptable foreign control of key British manufacturing businesses. The Secretary of State may, first, simply stop the change of control. In most circumstances that will be sufficient to protect our national interest. Where that is not appropriate a vesting order may be made, but only where it appears to be the sole appropriate means of safeguarding the national interest at risk. It is, therefore, a reserve power to be used if necessary.
Before a prohibition or vesting order becomes effective it must be approved by affirmative resolution by both Houses of Parliament. There will thus be an opportunity for Parliament to discuss, debate and to vote upon any proposal to use these powers. Further, no vesting order can be made before a separate order has been laid before both Houses dealing with the compensation to be paid in respect of the shares or assets required. At a time when a still partly collapsed stock market makes British industry peculiarly vulnerable—I am glad to see that the hon. Member for Sudbury and Woodbridge (Mr. Stainton) agrees with me—I believe that these are the minimal powers required to safeguard our national interest. Again, as I have indicated, they are fully accountable powers.

Mr. Eldon Griffiths: Will the hon. Gentleman square that with the Chancellor's invitation to Arab and other investors to put their money in this country?

Mr. Meacher: We welcome investment in manufacturing industry, but not in areas or in a way or to an extent which would be damaging to our national interests.
Another dimension of accountability is provided by planning agreements. I have no opportunity to refer at great lengths to what has been a series of most thoughtful and valuable speeches from my hon. Friends. I should like to be able to do so. Perhaps at the risk of being invidious I shall single out the remarks of my hon. Friend the Member for Motherwell and Wishaw (Dr. Bray). I am sure that my hon. Friend will be on the Committee and that he will make a most valuable contribution.
Planning Agreements are to be regarded not so much as documents but as a new relationship between the Government, a company and its workers. I am glad to be able to assure the Liberal Party in the form of the hon. Member for Colne Valley (Mr. Wainwright), who recommended that the NEB should make a Planning Agreement with the Secretary of State, that, subject to the vote of the House, we intend that the organising committee for the NEB will be appointed with Sir Don Ryder as chairman and that one of its major tasks will be to conduct a Planning Agreement with the Government so that there is agreement on the future plan and strategy of the Board. The purpose of Planning Agreements is to give an assurance to each of the three parties concerned of a simple but highly effective device of real and meaningful consultation.
Consultation is the essence of Planning Agreements. Without it, no Planning Agreement can exist. Though the Planning Agreement will be between the company and the Government, we envisage that union representatives from the company, while not formally party to the agreement, will take part, where they wish, in consultations on agreements with the Government. We also envisage that in drawing up the plans to be covered by an agreement management will consult full trade union representatives from the firm on all relevant matters. It is this process which contains the dynamic of the planning agreement process.
My hon. Friends the Members for Nelson and Colne (Mr. Hoyle) and

Coventry, South-West (Mrs. Wise), among others of my hon. Friends, were absolutely right to stress that this process will involve the trade unions in a considerable challenge—one of the greatest challenges they have faced. We shall expect companies participating in Planning Agreements to provide the full, necessary, relevant information to union representatives unless its disclosure would seriously prejudice a company's commercial interest or be contrary to the wider national security.
But there will be circumstances in which we believe that information disclosure should be compulsory. In order to clear up the point made by my hon. Friend the Member for Basildon (Mr. Moonman), may I say that the agreements will be entirely voluntary but that information disclosure will be compulsory—which is quite a different thing—subject to the conditions which I shall set out. We believe that this information should be made available so as not to penalise those firms which decline, on a purely voluntary basis, to enter into a voluntary agreement.
However, even in this vital area we have hedged round this important new requirement with full democratic safeguards. The hon. Member for Henley tried to conjure up alarm about the Department using the information it would secure under the powers of the Bill to prevent the NEB from buying a company which was about to be put out of business. It is characteristic of his party that it should want to preserve the right of big business to give the country a bad bargain.
The information which the Department will get under the powers of the Bill will not be disclosed outside the Government servants listed in the Bill unless it has been disclosed to the trade unions.

Mr. Heseltine: rose—

Mr. Meacher: No. I intend to finish what I am saying.

Mr. Heseltine: rose—

Mr. Deputy Speaker (Mr. George Thomas): Order.

Mr. Meacher: Specifically the information will not be disclosed to the NEB. I stress that because there have been considerable misrepresentations on it. The


Bill makes clear that the Minister or his officials will be liable to be prosecuted—

Mr. Heseltine: rose—

Mr. Meacher: I have two minutes, and I shall go on.
I intended to speak at greater length on the question of information, but I shall not have the opportunity to do so. However, my hon. Friend, when winding up the debate tomorrow, will complete what I intended to say.
The part of the Bill dealing with the information powers is the crux in promoting industrial democracy and will be of fundamental importance to the evolution of industrial practice. It is commonplace that one of the reasons for the poor industrial performance of this country over many years has been the polarisation in companies between the few, who decide what is to be done and the many, who are expected to do only what they are told.
Today it is no longer merely a matter of getting the support of industrialists and the City. It is a matter, above all, of winning the support of workers on the shop floor. Many people have come to see the class divide and all it stands for in industry as Britain's root economic problem. By opening the books to the workers, by releasing their energies to replace an otherwise resentful trade union veto, and by ensuring that industry is seen to constitute, not, as so many hon. Members opposite seem to see it, just management, but staff and workers, we believe that the Bill will offer a turning point in restoring Britain to her rightful place among the world's industrial nations.

11.0 p.m.

Mr. Peter Viggers: It is with great pleasure that I participate in the debate—

It being Eleven o'clock the debate stood adjourned.

Debate to be resumed tomorrow.

ADJOURNMENT

Motion made, and Question proposed, That this House do now adjourn.—[Mr. John Ellis.]

Orders of the Day — SALMONELLOSIS

11.1 p.m.

Mrs. Gwyneth Dunwoody: On Sunday 24th March 1974 Mr. Keith Holland of Clap Gates Farm, Haslington, Cheshire noticed that one of his 65 cows appeared to be rather unwell. He did not realise that his herd had been struck by one of the modern plagues. The difficulties that would then continue to complicate his life for a number of years have been so great that even now, long after, he is still considerably troubled by the plague of salmonellosis. His losses have amounted to well over £6,000 and his milk herd is still returning about 40 gallons a day less than usual. He has had six dead cows and innumerable aborted calves to look back on, and his cattle are still affected.
In the Press this morning we were told about the effects of salmonella as a bacteria on human beings. Since I know that you are a gentleman of great sensibility and feeling, Mr. Deputy Speaker, I will not go too deeply into the symptoms or effects of salmonella on humans. I am sure that you will know that two of the symptoms most commonly associated with the disease are vomiting and diarrhoea. In animals salmonella in its various forms can produce dramatic and unpleasant effects.
It is extraordinary that in a land such as ours which prides itself upon its public health and its animal health legislation, salmonella is still not a notifiable disease even though there is considerable evidence that the numbers of cases affected by the various forms of the disease have accelerated in such a way that it can now almost be said to be running at epidemic speed. The Ministry still has no accurate information about the number of cattle involved because there is no compulsion on farmers who are affected to return the necessary information.
Perhaps I may give an example. Mr. Holland is an astonishingly responsible young man. He is a working farmer with one cowman and he farms his own land. He is concerned about the effects of many of the problems farmers must deal with. When he discovered that his herd was badly infected he took steps not only to inform the local public


health authorities but to attempt to dissuade people from crossing his land by the public footpath. He took such personal care that the veterinary report of the outbreak pays particular tribute to his efforts.
These included the constant use of instruments which were kept in one place and refusal to allow visitors on to the farm—the specific precautions normally taken with a notifiable disease. He took these precautions because he felt strongly that he should protect those who might in some way be infected. His milk yield had to be destroyed. His family, luckily, were not contaminated by the disease. However, they had to bring in bottled milk for their own use while the herd was infected.
Salmonella has many forms, but the most common in Britain are Salmonella Typhinurium and Salmonella Dublin. Until 1968 these two types tended to dominate those cases which were returned as being due to the salmonella bacteria. Suddenly, however, in recent years Salmonella Exotica was introduced into this country in large numbers. In 1968, 1,654 cases of salmonella typhinurium were returned, compared with 2,142 cases of other salmonellae. Salmonella agona now appeared in Britain.
J. A. Lee, of the Epidemiological Research Laboratory at the Central Public Health Laboratory in London, said in a paper:
How did S. agona first get into England and Wales? The most likely explanation for the appearance of a new serotype seems to be importation in an animal feed ingredient. S. agona was isolated from imported fish meal in May 1970, and it is likely that this introduced the organism into domestic livestock in England and Wales. Since then, it has been isolated from feed ingredients including meat and bone meal, feather meal and poultry offal meal … it is likely that it is now being maintained through recycling of these treated animal wastes which are fed back to animals.
We have the bizarre situation that it seems likely that we have not only introduced new strains of salmonella into this country but are recycling the disease through herds many of which, because of the new husbandry techniques, are in closed quarters. Because of the use of poultry waste, which is being increasingly included in feed, we are not only putting the herds at risk but are in many instances contributing to the possible risk to human beings.
It is obvious that we have a law which is adequate in the way that it says feed waste should be dealt with when being imported. What is also obvious is that the port controls are not adequate and are not being enforced. There are suggestions that when feed has been turned back at the port of entry—there are large ports with proper port officers—it has sometimes found its way to a smaller port elsewhere in the country and has been admitted. What is being done to enforce the law at points of entry?
If feedstuff processing is controlled by law, is the amount of sterilisation being used adequate? In a modern society there should be a straightforward process of fumigation. If there is, why is recycled animal protein containing dry poultry waste not carefully sterilised before it is mixed in meal? I have no intention of attacking the people preparing meal. They must think of the price, and I know that they perform a useful service.
I am not talking only of Cheshire, although there are strong indications that a number of farms in Cheshire have been affected. There is a suggestion in the Ministry's own figures that in the 12 months preceding last May there were 700 cases reported in Cheshire alone, which makes one wonder whether our general protection is adequate.
If it seems likely that these cases are on the increase, how is it that the Ministry can send my constituent a letter couched in what I can only call equivocal terms? I have stood at the Dispatch Box often enough in the dark watches of the night holding forth about such fascinating subjects as rape seed, in the careful phrases of civil servants, to know that my hon. Friend the Minister is not necessarily the author of all the things he will say tonight. It is not enough for any Government Department just to send soothing phrases to a man who has lost a great part of his herd, who faces the risk of being forced into bankruptcy, and who is likely to find himself in great difficulties, simply because of his responsibility and honesty. It is not enough to say to that man that it would be difficult to bring in any kind of restriction on the movement of animals, because it would not be as effective as it might seem as a method of controlling the disease as salmonella organisms exist


widely in nature. Unfortunately, we are only too well aware of that.
It is not sufficient to say that, even it restrictions in individual cases of clinical disease were applied, many other undetected cases of animal infection which could be as serious as a means of spreading the disease would remain. We are aware of that fact as well.
It is no answer to say that, apart from the fact that movement and other restrictions on animals would not be effective as a means of dealing with salmonellosis, it would be impracticable, due to the scale of the operation, for the Ministry to intervene with compulsory measures in all cases. What precisely is meant by that? Is the Ministry accepting that there is so much salmonella that it does not have sufficient manpower to deal with the problem in all its horror?
If notification of information were made compulsory, we should know how many cases and what types. If there were restrictions on the movements of cattle and of people across farms and the general treatment that is given for cases of foot-and-mouth disease, we should have better facts on which to work. We must have far better enforcement of our laws at the ports. We must improve the fumigation procedures. These are only some of the problems facing farmers at this time.
My constituent does not regard his problems as so great that, at the first suggestion of the disease—I know that the majority of farmers would not do this—he should unload these infected cattle very rapidly on to the local market in order that they may be sold before the information has reached the ears of the authorities. But if anyone were to do that, he could successfully infect whole herds before the source of the infection was traced.
When Mr. Holland pointed out this fact—he was thinking of getting rid of healthy beasts only after the others had been slaughtered—he was told by the Ministry of Agriculture, Fisheries and Food, Agricultural Development and Advisory Service:
The Ministry has no power to prevent you from doing this, but I would strongly urge you to consider that the law, as it stands, could well result in criminal and civil proceedings against a person for misrepresenting the state of health of an animal to a purchaser. It is even possible that a person

might be liable for damages if he knew, but simply did not disclose, that an animal he sold was suffering from an infectious disease and the purchaser thereby suffered loss from the spread of infection.
In other words, the modern Catch 22: "Do not keep them, do not tell us, but do not sell them because, if you do, we shall have a go at you through the law." That is totally inadequate as a means of protecting either human beings or the herds of this country.
The terrifying thing is that this is not the first time that the matter has been raised in Parliament. I recall sitting in this Chamber listening to Sir Arthur Vere Harvey, now Lord Harvey, raising the difficulties facing people who had to contend with brucellosis. As a Devon Member at that time, I had seen the practical effect of brucellosis on human beings with recurrent fevers and the difficulties that they created for patients. Yet it was a long time before the House was prepared to take practical measures to protect both human beings and cattle.
I consider that we cannot afford this leisurely approach. Unless strong action is taken very soon—I do not mean the gentle discussion of some small powers to allow veterinary surgeons occasionally to enter farms with a view to protecting human health rather than thinking of the implications of animal health on human beings in the final analysis—we shall be failing in our duty as parliamentarians.
Recycled products are coming into greater use in this country. There is clear evidence that poultry particularly contribute to disease. If the products used in the recycling process are not properly sterilised and protected, the infection will spread.
If the Ministry is under-staffed and if it is unable to give monetary assistance to farmers who are affected in this way, it must come to this House to ask for more cash. It must demand more urgent action. It will not do for us to sit here and say that the problems which affected Keith Holland are the result of an unfortunate act of God which is affecting more and more farmers but which has no effect on the community as a whole. It has a definite effect, not just on the farming community but on those who are likely to come in contact with its products. There may be a case of infected milk.


There may be a spread of infection amongst our dairy herds. We in this House are the only people who can ensure that these health laws are brought into being as soon as possible.
I hope that my hon. Friend will be able to say that he intends to take urgent action, not just to protect my constituent, not just to seek monetary compensation, but to make every effort to ensure that the safety of the public is properly protected in every way.

11.15 p.m.

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Gavin Strang): I am grateful to my hon. Friend the Member for Crewe (Mrs. Dunwoody) for raising this question of salmonellosis. The number of severe cases has, I know, been causing much concern, and I agree with my hon. Friend's view that this is a very important matter where it is not sufficient for the Ministry to continue simply to deliberate and not take decisive action.
Notwithstanding my hon. Friend's comments about the letter which her constituent, Mr. Holland, received from the Ministry, I am sure that she will not regard it as inappropriate for me to express my deep sympathy about the very difficult circumstances and hardship which her constituent and other farmers have suffered as a result of outbreaks of this disease.
The records kept by our veterinary laboratories show that isolations of salmonellae in animal material reached a peak in 1969 and 1970 and have diminished somewhat since. However, the reduction has been mostly in Salmonella Dublin which is almost entirely confined to cattle and sheep. The salmonellae which affect humans have not been reduced; they have in fact shown some increase.
Perhaps I might say a few words about the causes. There are grounds for saying that the recycling of infection in the protein content of animal feedingstuffs plays a substantial part in the introduction of salmonellae on to farms. Salmonella bacteria may also be introduced by infected animals, by rodents and wild life, and through contaminated watercourses. Humans can also be a source of animal infection.
There is no doubt, however, that the tendency towards higher stocking densities creates the conditions in which a heavy infection can build up quickly. Outbreaks which would have been mild, or possibly unnoticed, before, may therefore develop into something more serious, and, since salmonella infection can readily be transmitted directly or indirectly to other animals, the general level of salmonellosis tends to rise.

Mrs. Dunwoody: That is true where there is recycling. It is not true where a new strain of salmonella is brought in from outside sources.

Mr. Strang: I do not quite understand. If my hon. Friend suggests that the intensity of modern livestock production does not in itself make herds more vulnerable to these organisms, I cannot agree with her.
I come now to the point pressed by my hon. Friend, that salmonellosis should be made a notifiable disease so that affected animals may be compulsorily slaughtered and compensation paid. The compulsory slaughter of stock and the payment of compensation could be justified only in relation to a policy of complete eradication of a disease, or where the objective is to keep the incidence of a disease at the lowest possible level after it has been brought under control.
We also need to have in mind what the notification procedure entails for notifiable diseases. Notification is dependent upon the observation of clinical symptoms in the animals and presupposes that certain control measures will follow. In the case of foot-and-mouth disease there is the restriction of movement of animals over a wide area. Infected and contact animals are slaughtered and compensation is paid. If we take anthrax as another example, restrictions are confined to the affected animal and its immediate surroundings and no compensation is paid.
Let us consider whether this type of action could be appropriate for the control of salmonellae. Salmonellae are extremely common and widespread. Most infections in animals show no symptoms at all. They are not particularly serious for the farmer. There are always, therefore, a large number of unidentified animal carriers of salmonellosis which are potential sources of infection. In these circumstances a policy of


salmonellosis eradication by the notification of the disease and by a slaughter policy would be impracticable and inappropriate.
To demonstrate the point perhaps I might mention a few of the problems. For instance, some farms where the disease had been diagnosed would be subject to restrictions and would have stock slaughtered. Others, where the infection was present, but in sub-clinical form, would escape. Both types of farm could be equally serious sources of infection. Further, most animals fully recover and thereafter cease to transmit the disease. A slaughter policy would result in many unnecessary killings.
We are, of course, anxious to do all we can to help in individual cases of salmonellosis and to improve the situation generally. Our veterinary investigation centres are always available to assist veterinary surgeons with laboratory and other work and to give advice on control measures.
I have already referred to the risk that contaminated feedingstuffs can be a means of spreading salmonellosis. While great care is often taken to ensure that feedingstuffs are not contaminated, there is room for improvement. Indeed, we are at present engaged in consultations with the interests concerned to ensure that all feedingstuffs containing animal protein come up to the standards of the best manufacturers.
I am happy to inform my hon. Friend that we intend to introduce a new order which will require that animal protein used in animal feedingstuffs must be processed in approved plants reaching specified standards.

Mrs. Dunwoody: When?

Mr. Strang: My hon. Friend asks, "When?" Let me come to that later.
My hon. Friend made the point that present legislation is not adequately enforced. I am sure that she will agree that the present import legislation is not aimed at salmonella. That is one of the reasons why we want this new protein processing order. This order would extend to imported feedingstuffs, which would then have to enter with veterinary certification from the country of origin or would be reprocessed in this country at an approved plant.
There are substantial practical problems to overcome with this order but we are making progress as quickly as possible. Because of swine vesicular disease we have had to give priority to the Diseases of Animals (Waste Foods) Order which is now in operation but this will also help with the salmonella problem.
I should also refer to the point raised by my hon. Friend in connection with the use of dried poultry waste as recycled animal protein. Our Veterinary Service has no evidence that this kind of material has transmitted salmonella infection. Indeed, the heat treatment required to extract moisture from the raw material gives a good measure of protection aganist harmful organisms. If my hon. Friend has any evidence—she used the phrase "very clear evidence"—I would be happy if she would pass it on to me.
I would now like to say something about the human health aspects. The House will be pleased to know that we have proposals to enable us to exercise compulsory control over an outbreak of salmonellosis in livestock as a precaution against the infection being passed on to humans. These proposals will take the form of a further new order—to be called the Zoonoses Order—which we hope to make in the next month or two.
It would enable us to investigate outbreaks; and we would be able to control the movement of livestock if, for example, it was considered that they should not go for slaughter for human consumption. We do not expect that this would often be necessary but, on the other hand, we regard the present state of affairs as quite unsatisfactory. This is because we cannot at present control the movement of livestock known to be infected with salmonellosis even if there is clearly a serious threat to human health. My hon. Friend referred to this state of affairs.
Although I have explained why we would not wish to make salmonellosis a notifiable disease, we are in fact considering, as part of our proposals, a procedure which would require diagnosed cases of salmonellosis in food animals to be reported to the Ministry's Veterinary Service. The difference here is that notification under the notifiable disease procedure depends on the observation of clinical symptoms in the animals, whilst our proposed reporting procedure would


apply only after salmonella bacteria had been isolated from material sent to a laboratory.
A reporting procedure on these lines would improve considerably our knowledge of the epidemiology of the disease—its sources and methods of spread; and would improve our ability to advise on effective control measures. I think that my hon. Friend would agree that such a control measure would go a considerable way to meeting the points she made about the notification of the disease when it was obviously prevalent in a herd.
Perhaps I might say something more about the timetable for the Zoonoses Order. We circulated our proposals about a year ago. We had many interests to consult—including of course the farmers' unions and the poultry industry—and we had to deal with a number of problems arising from that democratic process. I am glad to say that those consultations are now almost complete and, as I have already said, we hope to make the new order very soon.
Let me sum up. The Government are in fact tackling the problem of salmonellosis. We do not consider that the right solution is to treat the disease in the

same way as foot-and-mouth and other notifiable diseases. The plans we have in mind are control measures for animal protein in feedingstuffs; the reporting procedure I have outlined; the investigation of outbreaks; the identification of sources of infection and the methods of spread; and improved advice and control. All these steps, when implemented, should result in a better control of salmonellosis from the points of view of both human health and animal health.
I think that my hon. Friend would agree that if these are pursued urgently and implemented they would certainly very substantially improve the present unsatisfactory state of affairs with regard to this disease.
In conclusion, I thank my hon. Friend once again for raising this subject and for giving me the opportunity to explain the measures on which the Government are now working to control salmonellosis. As a result of her raising this matter and the debate tonight, I shall certainly do what I can to see that greater urgency is injected into the work we are doing on the control of this important disease.

Question put and agreed to.

Adjourned accordingly at twenty-eight minutes past Eleven o'clock.